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Procurement Guidance - Download selected sections

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					Procurement Guidance - (7/2011)

T1.13 - Metrics and Performance Management Revised 2/2006
A Metrics and Performance Management
1 General Revised 2/2006
2 Earned Value Management System Revised 2/2006
B Clauses
C Forms
T1.15 - Legal Coordination Guidance
A Legal Coordination Guidance
1 Introduction
2 Applicability
3 Definitions
4 Coordination Guidance Revised 10/2005
5 Representation
6 Exceptions and Waivers
B Clauses
C Forms
T3.1.3 Fundamental Principles
A Fundamental Principles
1 Standards of Conduct for FAA Employees Revised 10/2005
B Clauses
C Forms
T3.1.4 Delegations Revised 7/2009
A Contracting Authority, Delegation, and Unauthorized Commitments Revised 10/2008
1 Delegated Authority for Contracting and Other Procurement Activities Revised 7/2010
2 COCO Responsibilities Revised 7/2010
3 1102 Series Certification Revised 7/2010
4 Contracting Officer Warrants (1102 Series) Revised 7/2010
5 Procurement Authority Delegated to Other Qualified Individuals Revised 7/2010
6 Ratification of Unauthorized Commitments Revised 10/2010
B Clauses Revised 7/2010
C Forms Revised 7/2010
D Appendix Added 1/2011
1 1102 Series Warrant Standards Added 1/2011
2 Non-1102 Delegation of Procurement Authority Added 1/2011
T3.1.5 Conflict of Interest Revised 8/2009
A Conflict of Interest
1 Requirement for an Agreement Regarding Conflict-of-Interest Revised 1/2011
2 Processing a Conflict of Interest Revised 1/2007
B Clauses
C Forms Revised 1/2011
T3.1.6 Non-Disclosure of Information Revised 8/2009
A Disclosure of Information
1 General Revised 1/2007
2 Requirement for an Agreement Regarding Non-Disclosure of Information Revised 1/2011
3 Processing a Violation of the Agreement Regarding Non-Disclosure of Information       Revised 1/2011
4 Processing a Freedom of Information (FOIA) Request Added 4/2009
B Clauses
C Forms
T3.1.7 Organizational Conflict of Interest Revised 4/2006
A Organizational Conflict of Interest
1 Responsibilities Related to Organizational Conflict of Interest
2 Potential OCI Situations Revised 4/2006
3 Disclosure by Offerors or Contractors Participating in FAA Acquisitions
4 Remedies for Nondisclosure
5 Contractor Participation in Preparing Specifications or Statements of Work
6 Procedures
7 SIR Provisions
B Clauses
C Forms
T.3.1.8 Procurement Integrity Act Revised 7/2006
A Procurement Integrity Act
1 Applicability Revised 10/2010
2 FAA-Specific Definitions Revised 10/2010
3 Full Text Procurement Integrity Act 41 U.S.C Section 423 Added 10/2010
B Clauses
C Forms Revised 10/2010
D Appendix Added 10/2010
1 Administrator's Approval of FAA Procurement Integrity Act Definitions Added 10/2010
T3.1.9 Electronic Commerce Added 7/2007
A Electronic Commerce and Signature in Contracting Added 7/2007
1 General Added 7/2007
2 Considerations For Using Technology and Systems Added 7/2007
3 Electronic Signature Added 7/2007
B Clauses Added 7/2007
C Forms Added 7/2007
T3.2.1 - Procurement Planning Revised 4/2009
A Procurement Request (PR) Revised 7/2007
1 Purpose of a Procurement Request Package Revised 7/2007
2 Content of PR Package Revised 7/2008
3 Review by Chief Information Officer Added 7/2007
4 PRISM-Generated Requisition Revised 7/2007
5 Funds Certification Revised 7/2008
6 Requisition Approval Levels Revised 7/2008
7 Describing Requirements Revised 7/2007
8 Independent Government Cost Estimate Revised 1/2010
9 PR Package Clearances, Justifications and Other Documentation Revised 4/2009
10 Simplified Purchases Revised 7/2007
11 Lease or Rental Space Revised 7/2007
12 Logistics Center Supply Support Revised 7/2007
13 Real Property Revised 4/2009
14 Public Utilities Revised 7/2007
15 Returning a Deficient PR Package Revised 7/2007
B Clauses
C Forms Revised 7/2007
T3.2.1.2 - Market Analysis Added 10/2006
A Market Research and Analysis Added 10/2006
1 Market Research and Analysis Revised 7/2011
B Clauses Added 10/2006
C Forms Added 10/2006
T3.2.1.3 - Implementing OMB Circular No. A-76 Revised 1/2009
A Guidance for Implementing for OMB Circular No. A-76
1 OMB Circular A-76, Performance of Commercial Activities
2 Applicability of AMS
3 Responsibilities Revised 1/2009
4 Primary Phases for A-76 Competitions
5 Preliminary Planning
6 Public Announcement (Official Start Date)
7 Competition Procedures Revised 1/2009
8 Post Competition Accountability
9 Adversely Affected Employees
10 The Agency Tender
B Clauses
C Forms
T3.2.1.4 - Chief Financial Officer Requirements Revised 1/2008
A Chief Financial Officer Approvals and Other Requirements Revised 1/2006
1 Authorization for Procurement Request Revised 10/2010
2 Capitalization of Assets Revised 7/2010
B Clauses Revised 10/2007
C Forms Revised 1/2006
T3.2.1.5 - Disaster or Emergency Preparedness and Response Revised 1/2009
A Disaster or Emergency Contracting Added 10/2006
1 Local Area Set-Asides for Disaster or Emergency Added 10/2006
2 Continuity of Mission Critical Contracts Revised 1/2008
B Clauses Added 10/2006
C Forms Added 10/2006
D Appendix Added 7/2007
1 Appendix 1- Emergency Procurement Guide Revised 10/2010
T3.2.2 - Source Selection Revised 7/2009
A Source Selection
1 Source Selection Guide Revised 7/2010
2 Public Announcement and Announcement of Competing Offerors Revised 7/2007
3 Past Performance Revised 7/2011
4 Cancelling a Screening Information Request Revised 10/2010
5 Section 508 of Rehabilitation Act Revised 7/2007
6 Spare Parts
7 Source Selection Team Responsibilities Revised 7/2007
8 Supplier Process Capability Evaluation and Appraisal Revised 10/2010
9 Tiered Evaluation Added 10/2007
B Clauses
C Forms
1 Section 508 Checklist Added 7/2007
D Appendix
1 Source Selection Guide Revised 10/2010
2 Past Performance Samples Revised 7/2007
2.1 Sample 1 - Past Performance Instructions
2.2 Sample 2 - Past Performance Evaluation Factors Revised 10/2010
2.3 Sample 3A - Past Performance Evaluation Record
2.4 Sample 3B - Past Performance Questionnaire
2.5 Sample 3C - Business Management Past Performance Summary
2.6 Sample 4 Survey Form
3 FAA CPARS Guide Added 7/2011
T3.2.2.3 - Complex and Noncommercial Source Selection
A Establishment of a Qualified Vendors List (QVL)
1 General Revised 10/2010
2 Public Announcement Revised 6/2006
3 Screening and Evaluation Revised 10/2010
4 Evaluating Prospective Vendors Revised 10/2010
5 Notifying Vendors Excluded from a QVL Revised 10/2010
6 Competing Requirements Among Vendors on QVL
7 Updating a QVL Revised 10/2010
8 Cancelling a QVL Revised 10/2010
9 Availability of Information
10 QVL for Products Revised 10/2010
B Clauses
C Forms
T3.2.2.4 - Single Source Added 10/2006
A Single Source Contracting Added 10/2006
1 Basis for Single Source Revised 7/2011
2 Market Analysis Supporting Single Source Revised 1/2010
3 Award of Single Source Revised 4/2009
B Clauses Added 10/2006
C Forms Added 10/2006
D Appendix Added 10/2006
T3.2.2.5 - Simplified Purchase Method Revised 7/2009
A Simplified Purchasing
1 Simplified Purchasing Revised 10/2010
2 Purchase Orders Revised 1/2010
3 Blanket Purchase Agreement (BPA) Revised 10/2010
4 Prohibited and Restricted Purchases Revised 7/2011
5 FAA Sponsored Conferences, Seminars, Ceremonies, and Workshops         Revised 10/2010
B Clauses
C Forms
D Appendix
T3.2.2.6 - Unsolicited Proposals Revised 10/2008
A Unsolicited Proposals
1 Responsibilities Revised 10/2008
2 Content of UP
3 Receipt of UP Revised 10/2008
4 Procedures Revised 10/2008
5 Evaluation Revised 10/2008
6 Notifying the Offeror Revised 10/2008
7 Prohibitions
B Clauses
C Forms
T3.2.2.7 - Contractor Qualifications Revised 1/2009
A Contractor Qualifications
1 Responsibility Determination of Prospective Contractors Revised 4/2008
2 Team Arrangements Revised 1/2009
3 Debarment and Suspension Revised 4/2010
4 Notices to GSA and EPLS Added 4/2008
5 Prohibition Against Contracting with Inverted Domestic Corporations Added 1/2010
B Clauses
C Forms
D Appendix 1 - Definitions Revised 1/2010
T3.2.2.8 - Describing FAA Needs Revised 10/2006
A Describing Needs
1 Product Description Revised 10/2006
2 Types of Specification Revised 10/2006
3 Standards Revised 10/2006
4 Commercial Descriptions Revised 10/2006
5 Brand Name Added 10/2006
6 Statement of Work Revised 10/2006
7 Statement of Objective Added 10/2006
B Clauses
C Forms
T3.2.3 - Cost and Price Methodology Revised 10/2007
A Cost and Price Methodology
1 Proposal Analysis Revised 7/2010
2 Independent Government Cost Estimate Added 10/2007
3 Cost Accounting Standards Revised 7/2010
B Clauses
C Forms
D Appendix Revised 10/2007
1 Appendix 1- Instructions for Submitting Cost/Price Proposals Revised 7/2010
2 Appendix 2 - Template for Detailed Independent Government Cost Estimate Added 10/2007
T3.2.4 - Types of Contracts Revised 7/2009
A Types of Contracts Revised 7/2007
1 General Considerations Added 7/2007
2 Fixed-Price Revised 7/2007
3 Cost-Reimbursement Revised 1/2010
4 Incentive Contracts Revised 7/2009
5 Indefinite Delivery Revised 7/2007
6 Time-and-Materials / Labor-Hour Revised 7/2007
7 Letter and Ceiling Priced Contracts Revised 7/2007
8 Multi-year Contracting Revised 7/2007
9 Options Added 7/2007
10 Basic Agreement Revised 7/2007
11 Basic Ordering Agreement Revised 7/2007
B Clauses
C Forms
D Appendices Revised 7/2008
1 Appendix - Sample Letter Contract Added 7/2008
2 Appendix - Award Fee Added 7/2008
3 Appendix - Sample Award Fee Performance Evaluation Plan Added 7/2008
4 Appendix - Incentive Contracts Guide Added 4/2010
T3.2.5 - Contractor Ethical Guidelines Revised 4/2008
A Contractor Ethical Guidelines
1 Officials Not to Benefit
2 Contractor's Gratuities to FAA Personnel Revised 4/2008
3 Contingent Fees Revised 4/2008
4 Limitation on the Payment of Funds to Influence Federal Transactions Revised 4/2008
5 Subcontractor Kickbacks
6 Unreasonable Restrictions on Subcontractor Sales Revised 4/2008
7 Contracts with Federal Employees/Business Owned by Federal Employees
8 Voiding and Rescinding Contracts Revised 4/2008
9 Whistleblower Protection for Contractor Employees Revised 10/2010
10 Contractor Code of Business Ethics and Conduct Added 4/2008
11 Definitions Revised 4/2008
B Clauses
C Forms
T3.2.6 - Purchase Card Program Added 1/2009
A Purchase Card Program Added 1/2009
1 Purchase Card Revised 7/2011
2 Convenience Checks Revised 10/2010
B Clauses Added 1/2009
C Forms Added 1/2009
T3.3.1 - Contract Funding, Financing & Payment Revised 8/2009
A Contract Funding, Financing & Payment
1 Contract Funding Revised 10/2007
2 Continuing Resolution Revised 10/2007
3 Electronic Fund Transfer Revised 10/2007
4 Central Contractor Registration (CCR) Revised 10/2007
5 Types of Payment Revised 10/2007
6 Single and Partial Payments Revised 10/2007
7 Progress Payments Revised 10/2007
8 Recurring, Provisional, and Advance Payments Revised 10/2007
9 Performance-based Payments Added 10/2007
10 Financing Payment Revised 10/2010
11 Withholding Payment Added 10/2007
12 Prompt Payment Revised 8/2009
13 Fast Payment Added 10/2007
14 Invoices Revised 10/2010
15 Debt Collection Added 10/2007
16 Assignment of Claims Added 10/2007
B Clauses
C Forms Revised 4/2006
D Appendix Added 10/2007
1 Appendix 1: Sample Notice of Assignment Added 10/2007
T3.3.2 - Contract Cost Principles Revised 10/2007
A Contract Cost Principles
1 Applicability Revised 7/2007
2 Contracts with Commercial Organizations Revised 10/2007
3 Contracts with Educational Institutions Revised 7/2007
4 Contracts with State, Local, and Federally Recognized Indian Tribal Governments   Revised 7/2007
5 Contracts with Nonprofit Organizations Revised 7/2007
B Clauses
C Forms
D Appendix Added 7/2007
1 Appendix 1 - Summary of Selected Costs Added 7/2007
2 Appendix 2 - Selected Costs Revised 7/2010
3 Appendix 3 - Definitions Added 7/2007
T3.4.1 - Bonds and Insurance Revised 7/2008
A Bonds and Insurance
1 General Requirements
2 Proposal Guarantees Revised 7/2008
3 Bonds Revised 10/2010
4 Insurance
5 Definitions
B Clauses
C Forms
T3.4.2 - Taxes
A Taxes
1 General
2 Federal Excise Taxes
3 General Exemptions
4 State and Local Taxes
5 State and Local Tax Exemptions
B Clauses
C Forms
T3.5 Intellectual Property Revised 1/2009
A Patents, Copyrights, and Rights in Data Revised 1/2009
1 General Revised 1/2009
2 Patents and Copyrights Revised 1/2009
3 Patent Rights under Government Contracts Revised 1/2009
4 Rights in Data and Copyrights Revised 1/2009
5 Foreign License and Technical Assistance Agreements Revised 1/2009
B Clauses
C Forms Revised 1/2009
T3.6.1 - Small Business Development Program Revised 4/2009
A Small Business Development Revised 7/2005
1 Procurement Team Responsibilities in Support of the Small Business Development Program
Revised 1/2009
2 The FAA Small Business Development Program Office (SBDO) and Liaison Representative
Involvement Revised 1/2009
3 Prime Contracting with Small Business Revised 4/2011
4 Subcontracting with Small Business Revised 10/2010
5 Bonding Assistance and the DOT Lending Program Revised 4/2009
6 Business Declaration Revised 4/2011
7 Contract Bundling Revised 10/2010
8 Mentor-Protégé Revised 7/2010
9 Joint Ventures Added 1/2009
B Clauses Revised 10/2006
C Forms
T3.6.2 - Labor Laws Revised 4/2009
A Labor-Related Laws
1 General Revised 7/2007
2 Labor Disputes Causing Strikes or Delays Revised 7/2007
3 Overtime Added 7/2007
4 Contract Work Hours and Safety Standards Act Added 7/2007
5 Construction Contracts/Davis-Bacon Act
6 Procedures for Construction Contracts Revised 10/2010
7 Walsh-Healey Public Contracts Act Revised 10/2010
8 Fair Labor Standards Act
9 Service Contracts/Service Contract Act Revised 7/2007
10 Procedures for Service Contracts Revised 7/2007
11 Professional Employee Compensation Revised 7/2007
12 Dismantling, Demolition, or Removal of Improvements
13 Convict Labor
14 Equal Employment Opportunity Revised 7/2007
15 Equal Opportunity for Veterans Revised 1/2011
16 Employment of the Disabled Revised 7/2007
17 Forced or Indentured Child Labor Added 7/2007
18 Trafficking in Persons Added 7/2007
19 Nondisplacement of Qualified Workers Added 4/2009
20 Project Labor Agreements Added 7/2010
B Clauses
C Forms
D Attachment
T3.6.3 Environment, Conservation, Occupational Safety, and Drug Free Workplace Revised 4/2009
A Environment, Conservation, Occupational Safety, and Drug Free Workplace Revised 4/2009
1 Contracting for Environmentally Preferable and Energy-Efficient Products, Services and
Facilities Revised 4/2009
2 Responsibilities Revised 4/2009
3 Hazardous Material Identification and Material Safety Data Revised 7/2008
4 Notice of Radioactive Material Revised 4/2009
5 Toxic Chemical Release Reporting Revised 10/2010
6 Ozone Depleting Substances Added 4/2008
7 Energy Conservation Revised 4/2009
8 Preference for Recycled Content and Biobased Products Revised 4/2009
9 Government-owned or Leased Facilities Revised 4/2009
10 Drug Free Workplace Revised 4/2009
B Clauses
C Forms
D Appendix
1 Appendix 1- Definitions Revised 4/2009
2 Appendix 2 - FAA Affirmative Procurement Program Revised 4/2009
3 Appendix 3 - Recovered Materials Determination Revised 4/2008
4 Appendix 4 - Justification for not Acquiring EPA-Designated Recycled Content Products
Revised 4/2009
5 Appendix 5 Sources of Recycled Content and Environmentally Preferable Products Revised 4/2009
T3.6.4 Foreign Acquisition Revised 10/2007
A Foreign Acquisition
1 Buy American Act--Supplies Revised 10/2007
2 Buy American Act - Construction Materials Revised 1/2011
3 Buy American Act--Steel and Manufactured Products Revised 10/2010
4 Balance of Payments Program
5 Payment in Local Foreign Currency
6 Trade Agreements Revised 4/2011
7 Restrictions on Certain Foreign Purchases Revised 7/2006
8 Prohibition on Contracting with Entities that Engage in Certain Activities Relating to Iran
Added 1/2011
9 Customs and Duties
10 International Agreements and Coordination Revised 1/2007
11 Examination of Records by Comptroller General
12 Inconsistency Between English Version and Translation of Contract
13 Definitions Revised 1/2011
B Clauses
C Forms
T3.6.5 Indian Incentive Program
A Indian Incentive Program
1 Requirements Revised 10/2010
2 Definitions Revised 10/2010
B Clauses
C Forms
T3.7 Privacy and Freedom of Information
A Protection of Individual Privacy
1 General
2 Implementing Rules
B Clauses
C Forms
T3.8.1 Agreements, Cooperative Agreements, Gifts & Bequests Revised 10/2007
A Agreements, Cooperative Agreements, Gifts and Bequests
1 Agreements Revised 4/2009
2 Section 106 Cooperative Agreements Revised 1/2010
3 Gifts and Bequests Revised 7/2006
4 Interagency Procurement Revised 10/2010
B Clauses
C Forms
D Appendix
1 Attachment 1 - Parallel Authorities
2 Attachment 2 - Sample Interagency Agreement Revised 10/2007
3 Attachment 3 - Sample Intra-agency Agreement Revised 10/2007
4 Attachment 4 - Sample Other Transaction - MOA with State, Municipality or Private Entity
Revised 10/2007
5 Attachment 5 - Sample Other Transaction - Memorandum of Understanding (MOU)       Revised 10/2007
6 Attachment 6 - Sample Section 106 Cooperative Agreement Revised 10/2007
7 Attachment 7 - Intellectual Property - Section 106 Cooperative Agreements
T3.8.2 Service Contracting Revised 10/2008
A Service Contracting
1 General Requirements Revised 4/2006
2 Contractor Versus Government Performance Revised 4/2006
3 Inherently Governmental Functions Revised 4/2006
4 Support Services Contracting Revised 1/2010
5 Personal Services Revised 9/2006
6 Advisory and Assistance Services Revised 4/2006
7 Temporary Services Revised 4/2006
8 Concession Contracts Added 4/2006
9 Cafeteria/Vending Services Added 4/2006
10 Child Care Services Added 4/2006
11 Nonpersonal Health Care Services Added 4/2006
12 Guard Services Revised 4/2011
13 Contractor-Assisted Maintenance of the NAS Revised 10/2008
14 Other Requirements for Service Contracting Added 4/2006
15 Uncompensated Overtime Added 4/2006
16 Performance-Based Acquisition Added 4/2006
17 Services Crossing Fiscal Years Added 4/2006
18 Architect-Engineer Services Added 10/2007
B Clauses
C Forms Revised 4/2006
T3.8.3 Federal Supply Schedules Revised 1/2009
A Federal Supply Schedules
1 General Revised 10/2007
2 GSA Advantage and e-Buy Revised 10/2007
3 GSA Global Supply Revised 10/2007
4 Use of Federal Supply Schedules Revised 1/2009
B Clauses
C Forms
T3.8.4 Government Sources of Products/Services Revised 1/2010
A Use of Government Sources Revised 7/2007
1 Mandatory Sources Revised 10/2010
2 Excess Inventory Revised 7/2007
3 Acquisition Procedures for Purchases from Federal Prison Industries Revised 1/2010
4 Randolph-Sheppard Act Added 7/2007
5 Javits-Wagner-O'Day Act (JWOD) Revised 7/2008
6 Strategic Sourcing for the Acquisition of Various Equipment and Supplies (SAVES) Program
Revised 7/2008
7 Other Government Sources Added 7/2007
8 Use of Government Sources by Contractors Added 7/2007
B Clauses
C Forms
D Appendix
1 Contractor Authorization Letter for Use of FSS Contracts Revised 1/2005
2 FAA Procedures for Vending Facility Operations Under Randolph-Sheppard Revised 10/2010
T3.8.5 Leases Added 1/2006
A General Added 1/2006
1 Evaluation of Lease to Determine Accounting Treatment Added 1/2006
B Clauses Added 1/2006
C Forms Added 1/2006
D Appendix Added 1/2006
T3.8.6 Strategic Sourcing Added 1/2007
A Strategic Sourcing Added 1/2007
1 General Revised 10/2010
2 Strategic Sourcing for the Acquisition of Various Equipment and Supplies (SAVES) Program
Added 1/2007
3 SAVES Website Added 1/2007
4 SAVES Ordering for Office Supplies, Office Equipment, and IT Hardware   Added 1/2007
B Clauses Added 1/2007
C Forms Added 1/2007
T3.8.7 Construction Contracting Revised 8/2009
A Construction Contracting Added 7/2007
1 General Added 7/2007
2 Dismantling, Demolition and Removal of Improvements Added 7/2007
3 Salvageable Property Added 7/2007
4 Laws, Regulations and Standards Added 7/2007
5 Design-Build Added 4/2008
6 Liquidated Damages Added 7/2007
7 Planning and Pre-Solicitation Revised 8/2009
8 Pre-Award Added 7/2007
9 Post-Award Revised 1/2009
10 Contract Acceptance Inspection (CAI) Added 8/2009
11 Contract Completion/Closeout Revised 8/2009
B Clauses Added 7/2007
C Forms Added 7/2007
T3.10.1 Contract Administration Revised 1/2009
A Contract Administration
1 Contract Management Revised 4/2007
2 Basic Responsibility for Contract Administration Revised 4/2011
3 Assignment of Contracting Officer's Technical Representative Revised 7/2011
4 Communications with Vendors Revised 4/2007
5 Use of Government Excess Equipment Revised 4/2007
6 Contract Modifications Revised 7/2011
7 Suspension and Stop-Work Orders Revised 7/2011
8 Novations and Change-of-Name Agreements Revised 4/2008
9 Conversion of FAR Contracts to AMS Revised 4/2007
10 Contract Files Revised 7/2011
11 Contract Closeout Revised 7/2010
12 Final Indirect Cost Rates Added 7/2010
13 Contract Audit Added 7/2010
14 Bankruptcy Added 7/2009
15 Reporting Executive Compensation and First-Tier Subcontract Awards Added 4/2011
B Clauses
C Forms
D Appendices
1 Appendix 1 - COTR Delegation Memorandum Revised 7/2011
2 Appendix 2 - COTR Revocation Memorandum Revised 4/2011
3 Appendix 3 - When Should a COTR be Appointed Revised 7/2011
4 Appendix 4 - Stop-Work Order Revised 4/2011
5 Appendix 5 - Novation Agreement Revised 4/2011
6 Appendix 6 - Change of Name Agreement Revised 4/2011
7 Appendix 7 - Guide for Creating and Maintaining Contract Administration Files Revised 4/2011
8 Appendix 8 - Contract File Completion Statement Revised 4/2011
9 Appendix 9 - Memo to FAA COTR Terminating Contractor Accounts on FAA Systems
Revised 4/2011
10 Appendix 10 - Common Authorities for Modifications      Added 4/2011
T3.10.2 Subcontracting Policies
A Subcontracting
1 Consent for Subcontract Revised 4/2011
2 Contractors Purchasing Systems Reviews Revised 4/2011
3 Definitions Revised 4/2011
B Clauses
C Forms
T3.10.3 Government Property Revised 10/2009
A Government Property
1 Applicability
2 Responsibilities
3 Contractor's Property Control System
4 Audit of Property Control System
5 Official FAA Property Records
6 Types of Property Provided to Contractors Revised 10/2009
7 Contractor Use and Rental of Government Property
8 Relief from Responsibility
9 Contractors' Liability
10 Reporting, Redistribution, and Disposal of Contractor Inventory
11 Inventory Schedules
12 Scrap
13 Recovering Precious Metals
14 Screening of Contractor Inventory
15 Report of Excess Personal Property
16 Donations
17 Sale of Surplus Contractor Inventory
18 Exemptions from Sale by GSA
19 Destruction or Abandonment
20 Removal and Storage
21 Special Storage at the FAA's Expense
22 Subcontractor Inventory
23 Accounting for Contractor Inventory
24 Definitions
B Clauses
C Forms
D Appendix
1 Appendix - Sample Delegation Memo
2 Appendix - Sample Designation Letter
T3.10.4 Quality Assurance Revised 7/2007
A Quality Assurance
1 Objectives Revised 7/2007
2 Responsibilities Revised 10/2010
3 Levels of Quality Requirements and Standards Revised 7/2007
4 Acceptance Revised 7/2007
5 Warranties Revised 7/2007
6 Government-Industry Data Exchange Program Revised 7/2007
7 Considerations for Use of Clauses Revised 7/2007
8 Construction Nonconforming Parts Revised 7/2007
B Clauses Revised 7/2007
C Forms
D Appendix Revised 7/2007
T3.10.5 Product Improvement/Technology Enhancement
A Product Improvement/Technology Enhancement
1 General
B Clauses
C Forms
T3.10.6 Termination of Contracts
A Termination
1 General Guidance
2 Termination for Convenience of the FAA
3 Termination for Default
4 Definitions
B Clauses
C Forms
T3.10.7 Extraordinary Contractual Actions
A Extraordinary Contractual Actions
1 Authority
2 Guidance
B Clauses
C Forms
T3.10.8 Single Process Initiative
A Single Process Initiative
1 Background Revised 10/2010
2 Process Revised 10/2010
B Clauses
C Forms
T3.10.9 First Article Approval and Testing
A First Article
1 General
2 Minimizing Risk Revised 10/2010
3 Testing and Approval Revised 10/2010
4 Waiving First Article Revised 10/2010
5 Coordination
6 Changes
B Clauses
C Forms
T3.13.1 Other Administrative Procedures Revised 1/2009
A Administrative Matters
1 Numbering System for Procurement Instruments Revised 7/2010
2 Contract Format
3 Congressional Affairs Notification Revised 7/2010
4 Press Release and Public Announcement of Award Revised 7/2010
5 Federal Procurement Data System (FPDS) Revised 1/2009
6 Record Requirements Revised 1/2009
7 Records Retention Revised 1/2009
8 Annual Procurement Forecast Revised 1/2007
9 Reports Revised 10/2010
10 Contractor Attendance at FAA-Sponsored Training Revised 1/2009
11 Plain Language Added 7/2006
12 Approval of Multiple-Award Procurement Programs Revised 10/2010
B Clauses
C Forms
D Appendix Revised 1/2009
T3.14.1 Security Revised 1/2009
A Security
1 Facility/Security
2 Information and Systems Security
3 Personnel Security Revised 1/2009
4 Foreign Nationals
5 Related Security Guidance and Tools
6 Sensitive Unclassified Information Revised 7/2008
B Clauses Revised 1/2009
C Forms Revised 1/2009
T3.15.1 Systems and Parts Obsolescence Management
A Systems and Parts Obsolescence Management
1 Objective
2 Statement of Issue
3 Planning
4 Logistics Center
5 Requirements Organization's Role And Responsibility
6 Contracting Organization's Role And Responsibility
7 Logistics Integrator(s) Role And Responsibility
8 GIDEP Coordinator's Role And Responsibility
B Clauses
C Forms
D Appendix
T3.16 Commercial Licensing Agreement Added 4/2006
A Commercial Licensing Agreement Added 4/2006
B Clauses Added 4/2006
C Forms Added 4/2006
D Appendix Added 4/2006
T3.17 American Recovery and Reinvestment Act Revised 5/2009
A Implementation of Recovery and Reinvestment Act for Contracts Added 4/2009
1 General Requirements Added 4/2009
2 Public Announcement Added 4/2009
3 Solicitation and Award Revised 1/2010
4 Reporting Revised 1/2010
5 FPDS and Special Notice Requirements Revised 7/2010
6 Whistleblower Protections under the American Recovery and Investment Act     Added 4/2009
7 Federally Registered Lobbyists Added 5/2009
B Clauses Added 4/2009
C Forms Revised 1/2010
T1.13 - Metrics and Performance Management Revised 2/2006


A Metrics and Performance Management

1 General Revised 2/2006

Metrics and performance management tools provide systems that organize, integrate, and
report program performance information. Program metrics and performance measurements
should provide objective information that program and executive management need to make
informed decisions that positively impact their business and engineering performance. Program
performance measurement works best when it is considered to be a significant, integral part of
project management. Like any management or technical tool, performance measurement cannot
guarantee that a project will be successful. However, it does help the decision maker take a
proactive approach in dealing with the critical issues inherent in project management.

In addition to tracking program specific Technical Performance Measures (TPM), Key
Performance Parameters (KPP), and a Network Schedule; the use of an Earned Value
Management System (EVMS) for cost, schedule, and technical performance measurement and
integration provides insight into overall project performance. The specifics of an EVMS
performance based acquisition management system, as required by the Office of Management
and Budget (OMB), are contained in American National Standard ANSI/EIA-748-A. FAA
earned value management guidance is provided in the FAA Earned Value Management Guide
in FAST .

The EVMS generated performance measurement information is useful to both the FAA and the
contractor because it provides visibility into program and contract performance that would
otherwise be unavailable in this form. Appropriate selection and use of these tools enable
program managers and contractor personnel to examine key contract indicators, assess contract
performance and make critical decisions in managing contracts.

The EVM Focal Point must be involved prior to issuing a screening information request (SIR) to
review and assess contracting strategy and plan for EVM implementation consistent with the
JRC-approved program Attachment 3, Implementation Strategy and Planning, section 5.6,
Program Control.


2 Earned Value Management System Revised 2/2006

a. EVMS applications that are consistent with the American National Standard EIA-748-A
Industry Standard Guidelines provide detailed contract information that is appropriate for major
contracts or contracts that are considered high value, critical, or high risk to the agency. The
projects should include full EVMS compliance in these types of contract to provide the project
team and Contracting Officer sufficient level of insight into contractor's performance and
progress, while a tailored application of the Industry Standard Guidelines is appropriate for
projects and efforts that are not in the above categories.

b. Cost Performance Report (CPR): Projects should specify reporting requirements in the
contract, and use DID DI-MGT-81466A, tailored as appropriate, as a format for information
generated under EVMS requirements of clause 1.13-2, EVMS. The program official should tailor
the specific CPR reporting requirements to obtain:

      Information necessary to manage the contract
      Reporting formats to provide performance data consistent with the program metrics and
       performance measurement plan
      Reporting frequency to provide timely performance reporting.

c. SIRs should be structured to include separately priced contract line item(s) for EVM reporting
requirements.


B Clauses

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C Forms

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T1.15 - Legal Coordination Guidance


A Legal Coordination Guidance

1 Introduction

a. FAA acquisition actions can raise significant legal issues. For example, although pursuant to
49 U.S.C. §40110, FAA is exempt from federal acquisition statutes and regulations, other
statutes and court decisions require FAA to demonstrate a rational basis, supported by substantial
evidence, for acquisition actions. In addition, many laws and regulations enacted for purposes
other than procurement apply to FAA acquisitions.

b. Therefore, the service organization will coordinate acquisition actions with FAA counsel on
an ongoing basis throughout the acquisition lifecycle, as specified in Section 4. It is the
responsibility of agency counsel to represent FAA’s legal interests within the service
organization and, exercising independent professional judgment, advise the service organization
concerning legal issues, including, the legality and integrity of acquisition actions, and represent
the service organization in litigation and other legal matters.

c. This guidance establishes legal coordination as the agency practice for acquisition matters.


2 Applicability

This Guidance applies to all FAA acquisition matters, at all stages of the acquisition lifecycle.


3 Definitions

a. As used in this Guidance, the term "agency counsel" means:

       (1) for acquisition matters arising at, or referred to, Headquarters, the Assistant
       Chief Counsel, Procurement Law Division, AGC-500; and

       (2) for acquisition matters arising at, or referred to, a Region or Center, the
       responsible Regional or Center Counsel.

b. As used in this Guidance, the term "coordinate" means: soliciting the opinion and
recommendations of agency legal counsel reasonably prior to taking acquisition actions, e.g.,
after providing agency counsel accurate and complete information in sufficient time for review
and counsel.

c. As used in this Guidance, the term "service organization" means: any organization that
delivers a service, whether a business unit, project office, program directorate, or integrated
product team, or whether engaged in air traffic services, security, regulation, certification,
operations, commercial space transportation or airport development.

d. As used in this Guidance, the term "represent" means: recommending an appropriate legal
position for the service organization regarding an acquisition matter, and, as appropriate,
presenting this position to other parties, such as in administrative or judicial proceedings, or in
communications, discussions, or negotiations with another party during a protest, dispute, or
claim.


4 Coordination Guidance Revised 10/2005

 a. Coordination between the Service Organization and Agency Counsel

       (1) The service organization will coordinate acquisition actions with FAA counsel
       on an ongoing basis throughout the acquisition lifecycle. Agency counsel will
       timely respond to the service organization with accurate and effective legal advice
       that is consistent with legal mandates and relevant to the agency's business
       discretion. Agency counsel may, at his or her discretion, establish general time
       frames for such responses, which counsel will make every effort to meet, taking
       into account the agency counsel's workload and competing priorities. Counsel will
       describe and interpret legal issues involved in the matter; identify and assess the
       legal risk of a particular proposed decision; evaluate alternative courses of action;
       and identify potential illegal or improper actions.

       (2) In case of a conflict between FAA's legal interests and those of a service
       organization, agency counsel's client is the FAA, and not the service organization.
       In addition, each agency counsel is bound by independent professional ethical
       obligations and responsibilities as a licensed attorney.

       (3) The contracting officer will document the acquisition file with agency
       counsel's opinion and recommendations. The contracting officer will document
       the reasoning/decision process when choosing not to follow the agency counsel's
       recommendations.

b. General Coordination Guidance for Acquisition Actions

The service organization will coordinate with agency counsel on acquisition actions (including
supporting documents) with an estimated total value greater than $100,000. This coordination
guidance applies to acquisition actions including, as examples, but not limited to:

       (1) Required planning documents (e.g., acquisition strategy paper);

       (2) Solicitations, including Screening Information Requests, amendments, and
       other public announcements, such as market surveys;
(3) Responses to market surveys, including capability statements;

(4) Market analyses;

(5) Evaluation of offers or proposals (including preparation and review of
technical, cost, past performance, management and other evaluation plans and
reports);

(6) Communications with offerors on acquisition matters having legal
implications;

(7) Contract awards, regardless of contract type, over the dollar value threshold
specified above;

(8) Debriefings, including responses to inquiries regarding awards from parties
other than the awardee;

(9) Task and delivery orders issued under contracts over the dollar value threshold
specified above;

(10) Modifications under contracts that affect rights and obligations of either the
Government or the contractor;

(11) Option exercises;

(12) Award fee determinations;

(13) Determinations as to contract adjustments;

(14) Contract terminations;

(15) Settlement of contract claims;

(16) Liquidated damages;

(17) Interpretation and determination of legal rights under contracts, orders or
agreements;

(18) Communications with contractors, offerors, and other parties on acquisition
matters having legal implications, including correspondence that might impact the
rights and obligations of any party;

(19) Solicitation and contract matters involving rights in technical data, computer
software, patents, copyrights, trade secrets and other forms of intellectual
property, real estate, fiscal law, labor, environmental law, bankruptcy, anti-trust
law, mergers and other non-procurement areas of law, affecting acquisitions;
       (20) Debarments and suspensions, nondisclosure agreements, centers of
       excellence and individuals hired by contractors who received a "buy-out."

       (21) Solicitation and contract matters involving state and local laws;

       (22) Software license agreements;

       (23) Purchases from government-wide schedules or vehicles;

       (24) Interagency agreements;

       (25) Grants (except Airport Improvement Grants; policy concerning legal review
       of AIP grants is or will be covered elsewhere);

       (26) Cooperative agreements;

       (27) Memoranda of agreement and memoranda of understanding;

       (28) Franchises;

       (29) Agreements made under "other transaction authority;"

       (30) Unsolicited proposals;

       (31) Determinations, findings, and justifications issued pursuant to the
       Acquisition Management System, or as required by statue or regulation;

       (32) Proposed waivers and waivers of any portion of the Acquisition Management
       System;

       (33) Any other matters that in the opinion of agency counsel has an impact on the
       legality of an acquisition or legal consequences.

c. Coordination Guidance for Noncompetitive Procurements

The service organization will coordinate with agency counsel on non-competitive procurements
with an estimated total value greater than $10,000, and on procurements with an estimated total
value greater than $10,000 under which a waiver is sought from the Acquisition Management
System's competition policy.

d. Coordination Guidance for Unauthorized Commitments, Personal Services, and Other
Matters

The service organization will coordinate with agency counsel on the following matters, without
dollar limitation:
       (1) Freedom of Information Act, Trade Secrets Acts, and Privacy Act concerns
       relating to proposed release(s) of acquisition information;

       (2) Matters involving the FAIR Act/A-76;

       (3) Unauthorized agency commitments;

       (4) Proposals for innovative financing, such as advance payments, shared costs, or
       user fees;

       (5) Personal services contracts;

       (6) Consulting and advisory services

       (7) Matters relating to export controls or non-U.S. citizens;

       (8) Matters involving information, personnel or physical security;

       (9) Condemnations;

       (10) Sufficiency of title in real estate acquisitions;

       (11) Matters raising ethical or Procurement Integrity Act issues, or concerning
       conflicts of interest (personal and organizational), federal and state fraud statutes,
       or other federal and state criminal statutes.

       (12) Policy memoranda, procedures, regulations, orders, and guidance concerning
       acquisition matters;

       (13) Proposed legislation and testimony for legislative hearings on acquisition
       matters;

       (14) Correspondence about acquisition matters with parties outside the agency,
       including Congress, the General Accounting Office, and other federal agencies, or
       correspondence under the signature of the Secretary, Deputy Secretary,
       Administrator, Deputy Administrator or Regional and Center Directors.


5 Representation

a. Agency counsel will represent the service organization in any protest of an award or other
procurement action, and in contract claims, disputes, or controversies by and against the FAA,
including all meetings, negotiations, discussions, or communications on the matter after an
action has been filed in an administrative, judicial, or FAA forum.
b. Agency counsel will represent the service organization on behalf of the FAA in
communications, negotiations, and meetings with other parties touching upon the legal rights and
obligations of the parties, or where another party, including a government party, is expected to be
represented by legal counsel.


6 Exceptions and Waivers

At Headquarters, the Assistant Chief Counsel for Procurement, and at Regions and Centers, the
Region or Center Counsel, may make written exceptions to the Coordination Policy described in
Section 1.15, adjust dollar minimums, or in appropriate cases, waive the Coordination Policy.


B Clauses

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C Forms

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T3.1.3 Fundamental Principles


A Fundamental Principles

1 Standards of Conduct for FAA Employees Revised 10/2005

a. Transactions relating to the expenditure of funds require the highest degree of public trust and
an impeccable standard of conduct. The general rule is to strictly avoid any conflict of interest or
even the appearance of a conflict of interest in FAA-contractor relationships.

b. The CO, other integrated product team members, or anyone directly involved in conducting a
procurement are to comply with 5 CFR 2635, Standards of Ethical Conduct for Employees of the
Executive Branch, and 18 U.S.C. 201-209, 216.

c. Letters of commendation to contractors or their employees must be reviewed by the Office of
the Chief Counsel.

d. FAA personnel should consult their cognizant legal counsel about any questions or issues
pertaining to standards of conduct.


B Clauses

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C Forms

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T3.1.4 Delegations Revised 7/2009


A Contracting Authority, Delegation, and Unauthorized Commitments Revised 10/2008

1 Delegated Authority for Contracting and Other Procurement Activities Revised 7/2010

a. The Administrator has authority to enter into contracts, leases, grants, cooperative agreements,
and other transactions, and to delegate authority for managing FAA’s contracting function to the
FAA Acquisition Executive (FAE). Based on the Administrator’s delegation, the FAE has
authority to appoint, and redelegate contracting authority to, the Chief of the Contracting Office
(COCO). The COCO may redelegate his or her contracting authority to qualified individuals
needed to perform FAA’s contracting and other procurement functions.

b. Any delegation of authority to perform contracting and other procurement activities must be
in writing and explicitly state the authority and limitations it conveys. If specific authority is not
included in the delegation, then that authority does not exist.

c. Any delegation of authority to perform contracting or other procurement activities must be
supported by a need.

        (1) The level of delegated authority must be commensurate with the need in terms of cost,
        complexity and mission criticality.

        (2) The delegation level may not exceed the demonstrated need.

        (3) Demonstrated need is the most important criteria to consider when delegating
        authority.

d. All delegations of authority to perform procurement or other related activities must be
approved by the FAE prior to becoming effective. FAE approval does not apply to individual
Delegations of Procurement Authority (DPA) for the purchase card program.


2 COCO Responsibilities Revised 7/2010

a. The COCO is a position designated by the FAE that is delegated unlimited authority for
procurement contract award and administration, leases, real estate transactions, cooperative
agreements, non-Airport Improvement (AIP) grants, agreements, and other transactions. The
COCO, acting within the scope of the FAE’s delegation, manages day-to-day contracting
functions for FAA.

b. The COCO may redelegate contracting authority to qualified individuals, such as procurement
and real property contracting officers, logistics management specialists, managers of the
purchase card program, and other individuals. These individuals must have required training,
demonstrated knowledge, and adequate experience to enter into and administer legally binding
transactions on behalf of the Government. Except for the purchase card program managers,
these individuals cannot redelegate their authority. Before deciding to delegate contracting
authority, the COCO considers the following criteria:

       (1) There must be a demonstrated need for the authority requested.

       (2) The individual selected must meet the qualifications for the authority requested.
       However, an individual’s qualifications, without a demonstrated need for the authority,
       are not sufficient reason to grant contracting authority.

       (3) Other factors, such as organizational structure, total volume of the contractual actions,
       complexity and dollar value of the work involved, and aggregate value of the anticipated
       actions that the individual will be processing.

c. Specific responsibilities of the COCO include:

       (1) Review/Approve Qualifications. The COCO reviews and approves qualifications, such
       as education, training, knowledge, and experience, of personnel being considered for
       appointment as a Contracting Officer (CO) or for other types of procurement authority.

       (2) Delegate Authority. The COCO formally delegates contracting and other procurement
       authority in writing and maintains appropriate records of all delegations. Except for
       Delegations of Procurement Authority (DPA) for the purchase card program, all
       delegations of contracting and other procurement authority must be approved by the FAE
       prior to becoming effective.

       (3) Periodic Review. The COCO periodically reviews contracting and other procurement
       delegations to validate that the delegations remain appropriate and needed, reviews
       individual’s continuous learning to ensure requirements are being met, and periodically
       examines procurement actions to ensure authorized individuals do not exceed their
       delegated authority. The COCO also reviews all Level I and II warrants at least annually
       to determine whether each CO maintained professional proficiency and otherwise
       remains qualified. Level III warrants are reviewed at least every two years.

       (4) Terminate Delegations. The COCO may terminate a CO warrant or other
       procurement authority at any time. The termination is by letter, and states the general
       reason for termination and effective date, unless the original delegation provided for
       automatic termination. If the COCO terminates delegated contracting authority before an
       automatic termination date, or when there is no automatic termination date, the written
       notice to the individual should provide enough time and sufficient instructions to ensure
       the individual does not make any unauthorized commitments. The COCO ensures all
       delegations are returned to the COCO or to the Acquisition Career Manager for
       disposition when individuals terminate their employment with FAA, are assigned duties
       that do not require a delegation, or otherwise have the delegation terminated. Upon
       notification of the termination, the original warrant or certificate of appointment is
        annotated as “terminated” and includes the reasons for the termination. Reasons for
        termination may include:

                (a) The need for the delegated authority no longer exists, for example, retirement,
                resignation, termination of employment, or an assignment to another position.

                (b) Failure to comply with applicable requirements, limitations, policies,
                regulations, statutes, or delegated responsibilities;

                (c) Maintenance training/certification requirements have not been met, or failure
                to maintain all standards after appointment; or

                (d) Violation of a material portion of the ethics guidance for Federal employees
                and/or standards of conduct for Department of Transportation employees.

        (5) Changes in Authority. The COCO modifies delegated authority by written notice in
        enough time and with sufficient instructions to ensure that the individual does not make
        unauthorized commitments. The COCO must document any changes in an individual’s
        contracting authority, such as an increase in the number of contract actions, number or
        complexity of requisitions, or other operational necessity. Any increase or decrease in
        the dollar value or scope of an individual’s contracting authority requires issuing a new
        certificate of appointment or warrant and termination of the previous delegated authority.

        (6) Waivers. The COCO may waive qualification standards if circumstances clearly
        dictate need for delegation of authority, but an employee does not fully meet required
        standards. The waiver is conditional, identifies a duration, and states requirements that
        the individual must satisfy to be fully qualified. (See Section 4)


3 1102 Series Certification Revised 7/2010

Individuals must meet training, education, and experience requirements to qualify for an 1102
job series position, unless otherwise prohibited by an existing collective bargaining agreement.
AMS Policy Section 5, Acquisition Career Program, outlines certification requirements for
personnel once in the 1102 series.


4 Contracting Officer Warrants (1102 Series) Revised 7/2010

a. Certificate of Appointment. The FAE delegates contracting authority to procurement and real
property COs through a written certificate of appointment, also known as a warrant. This
certificate of appointment authorizes the individual to legally bind FAA. Warranted individuals
cannot further delegate their warrant authority nor “sign for” or over the name of another CO.

b. FAE Approval. The FAE must approve all certificates of appointments, or
warrants, before becoming effective.
c. Limitations. Warrants define the dollar and scope limitations of the authority. Warrants may
be limited or unlimited. A limited warrant states a total dollar limitation for each
transaction. The dollar value of a transaction includes the base year and all options, as defined
by "total estimated potential value" in Appendix C of AMS policy. An unlimited warrant allows
transactions at any dollar value. In addition to the dollar value, limited and unlimited warrants
must expressly state any limitations of authority (other than limitations in applicable laws or
regulations) and the specific types of transactions the CO is authorized to make. Grants,
cooperative agreements, and other transactions are excluded from delegated contracting authority
for procurement and real property COs unless expressly stated in the warrant. (See Appendix 2
for 1102 series warrant standards)

d. Warrant Levels. There are three CO warrant levels that apply to contracting authority. The
warrant levels align with the 1102 series certification levels. These warrant levels do not apply
to purchase card delegations. Unless otherwise prohibited by an existing Collective Bargaining
Agreement, individuals must meet the training, education, and experience requirements as
outlined in Appendix 1 to this section, to qualify for an acquisition position as a warranted CO.

e. Procedures for Obtaining Certificate of Appointment (Warrant).

       (1) The request for a certificate of appointment/warrant is prepared on an "Contracting
       Officer Warrant Request" (see AMS Procurement Forms) by the individual and submitted
       to his or her immediate manager.

       (2) The individual’s manager reviews the package to ensure that the individual meets the
       training, education, and experience requirements commensurate with the proposed
       delegated threshold. If the manager concurs, he or she forwards the nominee’s package
       to the COCO.

       (3) The COCO reviews the request and supporting documentation for completeness and
       evaluates the applicant’s acquisition experience, training, and evidence of certification. If
       the COCO concurs, he or she signs the request and forwards it to the Acquisition Career
       Manager (ACM).

       (4) The ACM reviews and forwards the request with a recommendation to the FAE. The
       certificate of appointment must include a warrant number, dollar limit of warrant
       authority, and any other applicable limitations, such as restrictions to certain types of
       transactions. If approved, the FAE signs the delegation and returns it to the ACM for
       distribution.

f. Discrete Authority for Grants, Cooperative Agreements and Other Transactions. The
Administrator’s authority to award and administer grants, cooperative agreements and other
transactions is delegated to the FAE, who subsequently redelegated this authority to the COCO
(see AMS Procurement Toolbox Procurement Delegation of Authority), subject to the below
restrictions:
       (1) COCO Redelegation. The COCO may redelegate this authority to procurement and
       real property COs and other individuals with required knowledge, experience, training,
       and skills for awarding and administering these types of transactions. All delegations
       must be in writing and expressly state the types of transactions and any limitations;

       (2) Administrator’s Review. Individuals delegated this authority must ensure that prior to
       award, the Administrator is notified and allowed to review any non-Airport Improvement
       Program (AIP) grant, cooperative agreement, or other transactions with a cumulative
       value of $10 million or more, or with significant Congressional interest. (See AMS
       Procurement Guidance T3.8.1 Agreements, Cooperative Agreements, Gifts & Bequests,
       for additional information.); and

       (3) Certificate of Appointment. The written certificate of appointment must expressly
       state authority to execute grants, cooperative agreements and other transactions.

g. Displaying Warrant and Other Certificate of Appointment. COs must prominently display the
warrant or other certificate of appointment so that information about their authority and any
limitations is readily available to the public and FAA personnel.

h. Skills Currency/Continuous Learning. To maintain the delegated contracting authority,
individuals must maintain appropriate 1102 series certification level. Acquisition professionals
must earn 80 continuous learning points (CLP) of skills currency training every two
years. COCOs monitor continuous learning requirements for individuals delegated contracting
authority. If an individual does not earn 80 CLPs every two years, the COCO, FAE, or
Administrator may revoke or modify the warrant or certificate of appointment to decrease the
dollar and/or specific type of transaction authority. The COCO notifies the warrant or certificate
of appointment holder in writing, when the revocation or modification is effective. The notice
provides enough time and sufficient instruction to ensure that no unauthorized obligations are
made.

i. Sample Certificates. Samples of various CO certificates of appointment are in AMS
Procurement Forms.


5 Procurement Authority Delegated to Other Qualified Individuals Revised 7/2010

a. General. The COCO may delegate a limited form of procurement authority to qualified
individuals who are not warranted COs, as indicated in 4 above. This limited authority may be
granted to individuals within or outside of the contracting office when supported by a
demonstrated need. The COCO evaluates the request and delegates authority to the individual
needing the authority. The delegation must be in writing and state specific limitations governing
the limited authority, such as dollar thresholds or types of procurement (i.e. supplies, services,
construction, etc). Guidance in this section does not apply to delegations under the purchase
card program, which is addressed in AMS Procurement Guidance T3.2.6, Purchase Card
Program.
b. Redelegation. Individuals delegated limited procurement authority from the COCO under this
subsection cannot redelegate that authority.

c. Delegation of Procurement Authority (DPA). A DPA may be granted to non-1102s (such as
Logistic Management Specialists (LMS) by the COCO through a written request. This
delegation requires individual certification at either Level I (up to $25,000) or Level II (up to
$50,000). This form of delegation authorizes the individual to legally bind FAA and delegates
specific authority related to the dollar threshold and types of procurements (not related to the
purchase card program). This procurement authority cannot be further delegated, and personnel
cannot “sign for” or over someone else holding procurement authority.

d. Delegation of Reimbursable Agreement Authority (DRAA). A DRAA may be granted to
qualified non-1102s by the COCO through a written request. This delegation does not allow the
individual to obligate funds nor is certification required. This authority cannot be further
delegated, and personnel cannot “sign for” or “sign over” anothers authority.

e. Limitations. All DPAs define the dollar and scope limitations of the authority granted by the
COCO. All limitations based on dollar thresholds must ensure the dollar value of a transaction
includes the base year and all options, as defined by "total estimated potential value" in
Appendix C of AMS policy. In addition to the dollar value, a DPA must expressly state any
limitations of authority (other than limitations in applicable laws or regulations) and state the
specific types of transactions the non-1102 is authorized to make (e.g. other transaction
agreements, reimbursable agreements, supplies, etc.).

f. Displaying the DPA/DRAA. Personnel must prominently display DPAs to make information on
the authority and any limitations readily available to the public and FAA personnel.

g. A sample of a delegation request and instructions can be found at the Acquisition Career
Manager website.




6 Ratification of Unauthorized Commitments Revised 10/2010

a. General.

     (1) Contracting Authority. Only a CO and other qualified individual delegated purchasing
     authority, acting within the scope of his or her delegated authority, may enter into contracts,
     leases, or other agreements and may obligate funds on behalf of the Government.

     (2) Unauthorized Commitments. A contract, lease, order, or agreement made by an FAA
     employee, other than a CO and other authorized person, is not binding because the person
     who made the agreement lacked the authority to commit the Government. An employee
     without proper authority who commits the Government is acting improperly. The employee
     will be held accountable and may be disciplined in accordance with Federal Aviation
    Personnel Manual (FAPM) Letter 2635 and Human Resources Policy Manual (HRPM) ER-
    4.1, as applicable.

    (3) Organizational Responsibility. FAA organizations must make every effort to prevent
    unauthorized commitments. Unauthorized commitments are serious acts of misconduct.
    Supervisors and managers must ensure each employee is aware of policy and procedures
    related to unauthorized commitments, and conduct and discipline rules for unauthorized
    commitments in FAPM Letter 2635 and ER-4.1.

    (4) Ratification. Although FAA's policy is to avoid unauthorized commitments, under
    certain approved circumstances such commitments may be ratified using the procedures in
    this section and converted into a legal contract.

    (5) Ratifying Official. The Director of Acquisition and Contracting at Washington
    Headquarters has authority to ratify unauthorized commitments. This authority is delegated
    to the Regional Administrators of each Logistics Service Center and to Center Directors for
    unauthorized commitments in service areas, regions, and centers. This ratifying authority
    cannot be delegated below these positions.

    (6) Local Implementation. All FAA organizations follow the procedures in this section.
    Logistics Service Area and Center contracting offices, and other organizations, may issue
    their own implementing procedures if they do not contradict the procedures in this section.

b. Procedures for Ratification. When an organization discovers an unauthorized commitment has
been made, the organization must take immediate action to ratify the commitment and have the
cognizant procurement office covert it to a legal action. Procedures for ratification are:

    (1) The supervisor/manager, assisted by the person who committed the unauthorized act,
    prepares a memorandum of facts containing the following information:

         (a) A detailed description of the circumstances that caused the unauthorized
         commitment;

         (b) Reasons why normal procurement procedures were not followed;

         (c) A description of the bona fide Government requirement that necessitated the
         commitment;

         (d) A statement as to the benefit to the agency as a result of the acquisition of the
         unauthorized supplies or services received;

         (e) The dollar value of the commitment;

         (f) Rationale for the contractor selected and identification of other sources considered;

         (g) The name of the individual who made the unauthorized act;
     (h) A statement regarding the disciplinary action taken to preclude the situation from
     recurring;

     (i) A specific recommendation that the transaction be approved and ratified;

     (j) A determination that funds are now available and were available at the time the
     unauthorized commitment was made; and

     (k) Any other pertinent facts including invoices, receiving reports, or other evidence
     concerning the transaction.

(2) Evidence of available funding should be attached to the memorandum.

(3) The memorandum of facts is signed by the employee who made the unauthorized
commitment, and endorsed by the supervisor/manager. By signing the memorandum, the
employee attests that the information is accurate and complete. If the employee has left the
FAA, then the organization having access to information about the unauthorized
commitment prepares the memorandum and it is signed by the former employee’s
supervisor/manager.

(4) Legal review and concurrence is obtained prior to submitting the memorandum to the
ratifying official.

(5) After legal concurrence, the memorandum along with the applicable procurement
request (PR) is transmitted to the cognizant procurement office for ratification action.

(6) When the procurement office receives a PR and a properly documented supporting
memorandum, the CO makes a written determination, as described below, and forwards the
ratification action to the ratifying official.

     (a) CO Determination. Prior to recommending approval of a ratification and as a part
     of the CO's review and determination, the CO:

          (i) Determines the price to be fair and reasonable;

          (ii) Recommends that payment be made;

          (iii) Determines that the settlement of the unauthorized commitment would not
          involve a contract dispute subject to AMS Policy 3.9;

          (iv) Determines that the purchase would have been authorized had the purchaser
          followed established procedures.

     (b) If an affirmative determination can be made in all areas of subparagraph (a) above,
     the CO prepares a memorandum to the ratifying official containing the following
     information:
               (i) A brief description of the unauthorized commitment;

               (ii) A statement that prices are fair and reasonable;

               (iii) A statement recommending approval of the unauthorized commitment; and

               (iv) A copy of all supporting documentation.

          (c) If the CO, after legal concurrence, is unable to make an affirmative determination
          in all areas of subparagraph (a) above, the memorandum to the ratifying official states
          the CO's reasons that an affirmative determination cannot be made, recommends that
          the action not be ratified, and offers an alternative solution to resolving the
          unauthorized commitment.

c. Notice of Infractions.

     (1) An unauthorized commitment made by an individual is considered a first infraction.

     (2) Upon receipt of a request for ratification from an organization, the cognizant Logistics
     Service Area Division manager at regions, Acquisition and Grants Group manager at the
     Technical Center, Program Director for Acquisition at the Aeronautical Center, or manager
     of Headquarters Contracting Group forwards a notice of infraction to the next level
     manager/supervisor above the supervisor/manager who signed the memorandum of facts.
     The notice advises the second level manager/supervisor that the action violates Federal law
     and FAA policy and guidance; reminds him/her of the proper procurement process; offers to
     provide written material or mini-training sessions (when possible) to orient the organization
     to the procurement process; requests every effort be made to avoid future violations; and,
     when appropriate, requests the widest possible distribution of the notice within the
     organization.

d. Disciplinary Actions for Making Unauthorized Commitments.

     (1) Individuals who make unauthorized commitments, as well as their immediate supervisor
     are subject to possible disciplinary actions. The recommended levels of disciplinary
     penalties for staff, managers, and/or supervisors, for up to three infractions, are contained
     FAPM Letter 2635 and ER-4.1.

     (2) Any unauthorized commitment made by a non-manager/supervisor with the approval of
     his/her manager/supervisor is an infraction against the manager/supervisor and not the non-
     manager/supervisor.

     (3) The period of accumulation for the above-mentioned infractions by staff, managers,
     and/or supervisors is 5 years.

e. Avoiding Ratification.
(1) When individuals who have not been delegated procurement authority need products or
services, or when individuals with delegated procurement authority need products or
services estimated to exceed their delegated authority, they must consult with the
procurement office for support and guidance to avoid unauthorized commitments.

(2) An unauthorized commitment occurs when someone, other than a CO or other
authorized individual, enters into an agreement on behalf of the Government but does not
have authority to do so or to obligate the Government.

(3) To avoid a ratification action, an office requiring products or services must ensure that
its employees are familiar with the procurement process and are aware of the consequences
surrounding unauthorized commitments.

(4) Individuals who have not been delegated procurement authority and who need supplies
or services must contact either the person within their organization who has delegated
procurement authority or the cognizant procurement office for assistance. The following are
examples of types of procurement and areas of the procurement process that may involve
individuals outside of the procurement offices, and circumstances in which procurement
authority may be delegated to individuals other than a CO. (For more information about
procurement methods generally used by individuals outside of the procurement office, see
AMS Procurement Guidance T3.2.2.5, Commercial and Simplified Purchase Method.)

     (a) Government Purchase Card. FAA employees may be delegated authority to
     procure supplies and services using the Government purchase card.

     (b) Blanket Purchase Agreement (BPA). A procurement vehicle, awarded by a CO, for
     ordering supplies or services that may authorize other specific individuals to order
     supplies or services from the vendor.

     (c) Purchase Card Check. FAA employees delegated purchase authority may
     use purchase card checks when a vendor does not accept the Government purchase
     card for on-the-spot, over-the-counter purchases of supplies and services.

(5) Existing Contracts. Contracting Officer Representative (COR), Contracting Officer
Technical Representative (COTR), Resident Engineers, etc., must be careful not to direct
the contractor to perform any task that would result in a change to the cost, schedule, or
scope of the contract, unless such action is authorized by the CO. It is easy through
conversation and during the normal daily interaction with the contractor to inadvertently
direct the contractor to perform tasks that result in cost or schedule impact. If such direction
is given without the delegated authority, or the express authorization of the CO, the result is
an unauthorized commitment.

(6) Contract Renewals. Contracts awarded for a base year plus options means that the
Government is only committed for the first year or base period. Each option period requires
a modification to the contract prior to the beginning of the option period to authorize
continued performance. Performance following the initial contract period must not begin
     until the contract has been properly modified to authorize continued performance. The
     program or requiring office is responsible for requesting a contract modification of options
     and providing the funds necessary to continue performance. Individuals who serve as the
     Government’s point of contact on a contract with option provisions should be familiar with
     the contract terms. Placing an order or directing tasks against an expired contract results in
     an unauthorized commitment. Prior to the beginning of the option year, if a modification
     has not been received to extend the contract period, the CO should be contacted for
     guidance before placing any orders or directing any tasks for that option period.

     (7) Examples. The following are examples of areas where unauthorized commitments are
     commonly made:

          (a) Acquiring Conference Space. After the request for conference space has been
          coordinated through the local real property office, the requiring office may discuss the
          requirement with the vendor/hotel to ensure the appropriate accommodations are
          available. However, the space should not be utilized until the transaction has been
          approved and an agreement signed by a person with the appropriate procurement
          authority.

          (b) Training. Request for training should be submitted to the procurement office in
          time to enable the requirement to be processed sufficiently in advance of the beginning
          of the course.

          (c) Professional Speakers or Arbitration Services. The requiring organization may
          identify the appropriate speakers or arbitrators and have discussions to ensure the
          Government’s needs will be met. However, the requiring office should not enter into
          any oral or written agreements on behalf of the Government unless the person making
          the agreement has the delegated authority to do so. If the requiring office does not have
          an individual with the delegated authority to enter into an agreement, the request
          should be submitted to the contracting office for processing.

f. Exceptions to Infractions.

     (1) In cases of extreme emergencies, such as natural disaster (floods, fires, tornadoes, and
     hurricanes) or emergencies that may have an immediate impact on the safety of the flying
     public, an individual may be put in a position of having to obligate the Government’s funds
     in order to preserve life and property. In these instances, if possible, the individual should
     contact the cognizant procurement office and request that a CO verbally authorize the
     contractor to proceed in accordance with the emergency procedures outlined in AMS policy
     3.2.2.4.1.1.

     (2) When the conditions outlined above occur, and the CO cannot be contacted to give a
     verbal authorization, the memorandum of fact documents the circumstances. It includes a
     statement that the person who made the unauthorized commitment is exempt from the
     requirement for disciplinary action.
g. Waivers. The Director of Acquisition and Contracting at Washington Headquarters has
authority to waive the disciplinary actions when the ratifying official justifies in writing that the
unauthorized act does not warrant disciplinary action.

h. Definitions.

      (1) "Ratification" - an act of approving an unauthorized commitment by an official who has
      the authority to do so.

      (2) "Unauthorized commitment" - an agreement entered into by a representative of the
      Government who does not have the authority to enter into agreements on behalf of the
      Government.


B Clauses Revised 7/2010

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C Forms Revised 7/2010

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D Appendix Added 1/2011

1 1102 Series Warrant Standards Added 1/2011
FAA Certification Level        Threshold Authority           Corresponding FAC-C
                                                             Certification
Level I                        Up to $500,000                Level I



Level II                       Up to $10,000,000             Level II



Level III                      Unlimited                     Level III




2 Non-1102 Delegation of Procurement Authority Added 1/2011
Non-1102
Certification         Threshold
Level                 Authority         Experience             Education                          Training
Level I:              Up to $25,000     At least 1 year of     Formal education is not            CON 100
                                        simplified acquisition required for certification.        CON 237
                                        purchasing experience.                                    CLC 004
                                                                                                  FAA 04202
Level II:   Up to $50,000   At least 2 year of       Formal education is not       CON 110
                            current (within last 4   required. However, at least CON 111
                            years) simplified        15 semester hours from        CON 112
                            acquisition or           among the following           CON 120
                            purchasing experience.   disciplines: law, accounting, FAA 60004257
                                                     business, finance,
                                                     contracts, purchasing,
                                                     economics, industrial
                                                     management, marketing,
                                                     quantitative methods, or
                                                     organization, and
                                                     management is desired.
T3.1.5 Conflict of Interest Revised 8/2009


A Conflict of Interest

1 Requirement for an Agreement Regarding Conflict-of-Interest Revised 1/2011

a. Persons who have a real or apparent conflict of interest may be unable to render impartial,
technically sound, and objective assistance, advice, or decisions. A procurement team member
(program officials, contracting personnel, legal counsel, and others supporting a program),
Office of Dispute Resolution for Acquisition (ODRA) member, or other Federal member who
has a real or apparent conflict of interest, and who is a Federal employee, must withdraw from
participation in the source selection process if law (18 U.S.C. 208) or regulation (5 CFR Part
2635) requires it. Considerations of equity and integrity of the procurement process require that
non-Government members of a procurement team be held to the same standards.

b. Unless a procurement team member receives prior authorization, a procurement team member
who is a Government employee should not participate if the result is likely to affect the financial
interests of the procurement team member's household, or the procurement team member knows
a person with whom the procurement team member has a covered relationship as defined in 5
CFR 2635.502, or the procurement team member represents a party, if a reasonable person with
knowledge of the relevant facts would question the procurement team member's impartiality in
the matter. The law does not require non-Government procurement team members be removed
when they have an apparent conflict, but the FAA's public image, workforce morale, and
considerations of equity dictate that they be treated exactly as our own employees are treated.

c. Each person involved in the source selection process, including the source selection official
(SSO), contracting officer, and legal counsel, who might have access to confidential or
proprietary procurement information such as procurement strategy, offerors' proposals, results of
evaluations, and the final selection actions, must sign and submit an Agreement Regarding
Conflict-of-Interest (see AMS Procurement Forms) to the SSO or designee before any
participation in the source selection process. This is to ensure that no conflict of interest exists.
An Agreement Regarding Conflict-of-Interest should be completed before distribution of
offerors' submissions for evaluation and at any time afterwards, if an individual's financial,
business, or employment situation changes to create the potential for a conflict of interest. The
Agreement Regarding Conflict-of-Interest must be completed by individual procurement team
members for each procurement and retained in the pre-award file.


2 Processing a Conflict of Interest Revised 1/2007

If the SSO or designee becomes aware of a conflict of interest, the SSO should notify the
procurement legal counsel immediately. Action should be taken to remove the party from further
participation in the source selection activities until the conflict of interest is reviewed and legal
advice obtained. A procurement team member must be excused or removed from participation in
the source selection process should a conflict of interest exist, unless a waiver is granted. All
conflict of interest cases must be clearly documented. The procurement team members must
update and resubmit any and all conflict of interest statements if an individual's financial,
business, or employment relationship changes to the extent that a conflict of interest could exist.


B Clauses

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C Forms Revised 1/2011

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T3.1.6 Non-Disclosure of Information Revised 8/2009


A Disclosure of Information

1 General Revised 1/2007

The Source Selection Official (SSO), each procurement team member (program officials,
contracting personnel, legal counsel, and other support staff), including advisors, and any other
individuals exposed to commercially sensitive and source selection sensitive information must
maintain confidentiality of that information.


2 Requirement for an Agreement Regarding Non-Disclosure of Information Revised 1/2011

Maintaining the security of sensitive procurement information and source selection proceedings
is of paramount importance to the integrity of the evaluation process. To assure that sensitive
data acquired in the course of the procurement are handled properly, the individuals (including
the Source Selection Official (SSO), Contracting Officer, and Legal Counsel), involved in these
proceedings are required to sign an Agreement Regarding Non-Disclosure of Information before
the Screening Information Request (SIR) is issued. This agreement provides notice of the type of
information that requires protection and the penalties for improperly disclosing such information.


3 Processing a Violation of the Agreement Regarding Non-Disclosure of Information
Revised 1/2011



Any suspected or actual improper disclosure of procurement sensitive information must be
reported to the Contracting Officer. The Contracting Officer will consult with the Procurement
Legal Division for guidance in this matter. The suspected violator should not be permitted to
continue in the procurement process until the suspected violation has been reviewed and legal
advice obtained.


4 Processing a Freedom of Information (FOIA) Request Added 4/2009

The CO processes requests for procurement information under FOIA. Unless the request for
information is exempt from disclosure under the Act (such as trade secrets and commercial or
financial information that is priviledged or confidential), the information must be released. The
CO coordinates responses to FOIA requests with the local FOIA Control Officer and the Office
of Chief Counsel (Procurement Guidance T1.15.4.d(1)).


B Clauses
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C Forms

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T3.1.7 Organizational Conflict of Interest Revised 4/2006


A Organizational Conflict of Interest

1 Responsibilities Related to Organizational Conflict of Interest

a. The policy of the FAA is to avoid contracting with contractors who have unacceptable
organizational conflicts of interest. An organizational conflict of interest means that because of
existing or planned activities, an offeror or contractor is unable or potentially unable to render
impartial assistance to the agency, or has an unfair competitive advantage, or the offeror or
contractor's objectivity is or might be impaired. It is not the intention of the FAA to foreclose a
vendor from a competitive acquisition due to a perceived OCI. FAA Contracting Officers are
fully empowered to evaluate each potential OCI scenario based upon the applicable facts and
circumstances. The final determination of such action may be negotiated between the impaired
vendor and the Contracting Officer. The Contracting Officer's business judgment and sound
discretion in identifying, negotiating, and eliminating OCI scenarios should not adversely affect
the FAA' s policy for competition. The FAA is committed to working with potential vendors to
eliminate or mitigate actual and perceived OCI situations, without detriment to the integrity of
the competitive process, the mission of the FAA, or the legitimate business interests of the
vendor community. Contractors should be instructed to contact the FAA at the earliest possible
time after an investment decision has been made for a particular acquisition to evaluate whether
any identified actual or potential conflicts of interest may be avoided or mitigated. As used
herein, the term "person" includes any legal entity including a partnership, corporation, or
association.

b. Mitigation Plans. The FAA reserves the right to audit any or all proposed mitigation plans, and
to reject a plan, if in the opinion of the Contracting Officer such a plan is not in the best interests
of the FAA.


2 Potential OCI Situations Revised 4/2006

a. Contracting Officers should analyze planned acquisitions to:

        (1) Identify and evaluate potential OCI's early in the acquisition process (prior to
        issuance of an initial screening information request (SIR), if possible); and

        (2) Avoid, neutralize, or mitigate potential conflicts before contract award.

b. Examples of Conflict Situations. The following examples illustrate situations in which
questions concerning organizational conflicts of interest may arise. They are not all inclusive, but
are intended to help the Contracting Officer apply general guidance to individual contract
situations:
       (1) Unequal Access to Information. Access to "nonpublic information" as part of
       the performance of an FAA contract could provide the contractor a competitive
       advantage in a later competition for another FAA contract. Such an advantage
       could easily be perceived as unfair by a competing vendor who is not given
       similar access to the relevant information. If the requirements of the FAA
       procurement anticipate the successful vendor may have access to nonpublic
       information, all vendors should be required to submit and negotiate an acceptable
       mitigation plan.

       (2) Biased Ground Rules. A contractor in the course of performance of an FAA
       contract, has in some fashion established important "ground rules" for another
       FAA contract, where the same contractor may be a competitor. For example, a
       contractor may have drafted the statement of work, specifications, or evaluation
       criteria of a future FAA procurement. The primary concern of the FAA in this
       case is that a contractor so situated could slant key aspects of a procurement in its
       own favor, to the unfair disadvantage of competing vendors. If the requirements
       of the FAA procurement anticipate that a contractor may have been in a position
       to establish important ground rules, including but not limited to those described
       herein, the contractor should be required to submit and negotiate an acceptable
       mitigation plan.

       (3) Impaired Objectivity. A contractor in the course of performance of an FAA
       contract, is placed in a situation of providing assessment and evaluation findings
       over itself, or another business division or a subsidiary of the same corporation, or
       another entity with which it has a significant financial relationship. The concern
       in this case is that the contractor's ability to render impartial advice to the FAA
       could appear to be undermined by the contractor's financial or other business
       relationship to the entity whose work product is being assessed or evaluated. In
       these situations, where a "walling off" of lines of communication may well be
       insufficient to remove the perception that the objectivity of the contractor has
       been tainted. If the requirements of the FAA procurement indicate that the
       successful vendor may be in a position to provide evaluations and assessments of
       itself or corporate siblings, or other entity with which it has a significant financial
       relationship, the affected contractor should provide a mitigation plan that includes
       recusal by the vendor from the affected contract work. Such recusal might include
       divestiture of the work to a third party vendor.

c. Contracting Officers should obtain the advice of legal counsel and appropriate technical
specialists in evaluating potential conflicts and in developing any necessary SIR provisions and
contract clauses. Before issuing a SIR for a contract that may involve a potential conflict, the
Contracting Officer should formulate, in conjunction with legal counsel and team members, a
course of action for resolving the conflict. The rational basis supporting the Contracting Officer's
decision on an OCI issue should be documented in the contract file.


3 Disclosure by Offerors or Contractors Participating in FAA Acquisitions
a. Offerors or contractors should provide information which concisely describes all relevant facts
concerning any past, present or currently planned interest, (financial, contractual, organizational,
or otherwise) relating to the work to be performed and bearing on whether the offeror or
contractor has a possible OCI.

b. If the offeror or contractor does not disclose any relevant facts concerning an OCI, the offeror
or contractor, by submitting an offer or signing the contract, warrants that to its best knowledge
and belief no such facts exist relevant to a possible OCI.


4 Remedies for Nondisclosure

The following are possible remedies should an offeror or contractor refuse to disclose, or
misrepresent, any information regarding a potential OCI:

       a. Refusal to provide adequate information may result in disqualification for
       award.

       b. Nondisclosure or misrepresentation of any relevant interest may also result in
       the disqualification of the offeror for award.

       c. Termination of the contract, if the nondisclosure or misrepresentation is
       discovered after award.

       d. Disqualification from subsequent FAA contracts.

       e. Other remedial action as may be permitted or provided by law or in the
       resulting contract.


5 Contractor Participation in Preparing Specifications or Statements of Work

The Contracting Officer should consider the following when contractor support is used to
prepare specifications or statements of work:

a. If a contractor prepares and furnishes complete specifications covering nondevelopmental
items, to be used in a competitive acquisition, that contractor may have a conflict in furnishing
these items, either as a prime contractor or as a subcontractor, for a reasonable period of time
including, at least, the duration of the initial production contract. Therefore, a contractor who has
prepared and furnished completed specifications for such items should be excluded from
competition for that acquisition. However, an OCI may not exist in the following circumstances:

       (1) Contractors furnish, at Government request, specifications or data regarding a
       product they provide, even though the specifications or data may have been paid
       for separately or in the price of the product; or
       (2) Situations in which contractors, acting as industry representatives, help
       Government agencies prepare, refine, or coordinate specifications, regardless of
       source, provided this assistance is supervised and controlled by Government
       representatives.

b. If a single contractor drafts complete specifications for nondevelopmental equipment, it should
be eliminated for a reasonable time from competition for production based on the specifications.
This should be done in order to avoid a situation in which the contractor could draft
specifications favoring its own products or capabilities. In this way the FAA may be assured of
getting unbiased advice as to the content of the specifications and may avoid allegations of
favoritism in the award of production contracts.

c. There may be instances when contractor assistance is necessary in preparing statements of
work. When contractor support is used, the contractor might be in a position to favor its own
products or capabilities. If a contractor prepares, or assists in preparing, a statement of work to
be used in competitively acquiring a system or services, or provides material leading directly and
without delay to such a statement of work, that contractor may not supply the system, major
components of the system, or the services unless:

       (1) It is the single source; or

       (2) It has participated in the development and design work; or

       (3) More than one contractor has been involved in preparing the work statement.

d. In development work, it is normal to select firms that have done the most advanced work in
the field. These firms can be expected to design and develop around their own prior knowledge.
Development contractors can frequently start production earlier and more knowledgeably than
firms that did not participate in the development, and this can affect the time and quality of
production, both of which are important to the Government. In many instances the Government
may have financed the development. Thus, while the development contractor has a competitive
advantage, it is an unavoidable one that is not considered unfair, therefore no OCI mitigation
would be necessary.


6 Procedures

a. The Contracting Officer should award the contract to the apparent successful offeror unless a
conflict of interest is determined to exist which cannot be neutralized, avoided, or mitigated.
Before determining to withhold award based on conflict of interest considerations, the
Contracting Officer should notify the contractor, provide the applicable reasons, and allow the
contractor a reasonable opportunity to respond. If after consultation with legal counsel and team
members, the Contracting Officer determines that it is in the best interest of the FAA to award
the contract notwithstanding a conflict of interest, the Contracting Officer should document that
determination.
b. When investigating a suspected OCI concerning a prospective contractor (in instances when a
contractor has not independently submitted any information), the Contracting Officers should
first seek the information from within the Government or from other readily available sources.
Government sources include the files and the knowledge of personnel within the contracting
office, other contracting offices, the cognizant contract administration and audit activities and
offices concerned with contract financing. Non-Government sources include publications and
commercial services, such as credit rating services, trade and financial journals, and business
directories and registers.

c. If the Contracting Officer decides that a particular acquisition involves a potential OCI, the
Contracting Officer should, before issuing the SIR:

       (1) Prepare a written analysis, including a recommended course of action for
       avoiding, neutralizing, or mitigating the conflict; and

       (2) If appropriate, a draft SIR provision and/or contract clause.

d. The Contracting Officer should also consider additional information provided by prospective
contractors in response to the SIR or during negotiations and attempt to avoid, neutralize, or
mitigate the OCI before contract award.

e. The Contracting Officer should retain all organizational conflict of interest information in the
contract file.

f. If, during the effective period of any restriction, a contracting office transfers acquisition
responsibility for the item or system involved, it shall notify the successor contracting office of
the restriction, and send a copy of the contract under which the restriction was imposed.


7 SIR Provisions

The following should be considered in developing SIRs where potential conflicts of interest may
be evident. As a general rule, potential organizational conflicts of interest may be resolved by
imposing some restraint, appropriate to the nature of the conflict, upon the contractor's eligibility
for future contracts or subcontracts. Therefore, affected SIRs should contain a provision that:

       a. Invites offerors' attention to this concern;

       b. States the name of the potential conflict as seen by the Contracting Officer;

       c. States the nature of the proposed restraint upon future contractor activities; and

       d. Depending on the nature of the acquisition, states whether or not the terms of
       any proposed clause and the application of this information to the contract are
       subject to negotiation.
B Clauses

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C Forms

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T.3.1.8 Procurement Integrity Act Revised 7/2006


A Procurement Integrity Act

1 Applicability Revised 10/2010

As provided by 49 U.S.C. Section 40122(g)(3), effective October 1, 1999, FAA is subject to the
Procurement Integrity Act (the Act) (41 U.S.C. Section 423). However, in 41 U.S.C. Section
423, subsections (f) Definitions and (g) Limitations on Protests, do not apply to FAA. Congress
directed the FAA to adopt its own definitions in lieu of the definitions in subsection (f) of the
Act, consistent with the intent of AMS and the Act. By memorandum dated July 14, 2000, the
Administrator approved FAA's definitions. The FAA-specific definitions in this Procurement
Guidance are to be substituted for subsections (f) Definitions and (g) Limitation on Protests.


2 FAA-Specific Definitions Revised 10/2010

Under AMS, FAA-specific definitions are to be substituted for Procurement Integrity Act
subsection (f) "Definitions" and (g) "Limitation on Protests."

                           FAA Definitions as Used in 41 U.S.C. Section 423

(1) The term "contractor bid or proposal information" means any of the following information
submitted to FAA as part of or in connection with a Screening Information Request (SIR) or an
unsolicited proposal, to enter into an FAA procurement contract, if that information has not been
previously made available to the public or disclosed publicly:

      (A) Cost or pricing data (as defined in Appendix C of the AMS).

      (B) Indirect costs and direct labor rates.

      (C) Proprietary information about manufacturing processes, operations, or techniques
      marked by the contractor in accordance with applicable law or regulation.

      (D) Information marked by the contractor in accordance with (1) AMS Clause 3.2.2.3-16,
      "Restriction on Disclosure and Use of Data," or (2) other applicable law and regulation.

(2) The term "source selection information" means any of the following information prepared for
use by the FAA for the purpose of evaluating documentation, information, presentations,
proposals, or binding offers which an offeror submits in response to a Screening Information
Request (SIR), or in an unsolicited proposal, to enter into an FAA procurement contract, if that
information has not been previously made available to the public or disclosed publicly:
    (A) Proposed costs or prices submitted in response to a FAA SIR, or lists of those proposed
    costs or prices.

    (B) Source selection plans.

    (C) Technical evaluation plans.

    (D) Technical evaluations of responses to SIRs or unsolicited proposals.

    (E) Cost or price evaluation plans.

    (F) Cost or price evaluations of responses to SIRs or unsolicited proposals.

    (G) Down select determinations identifying SIR responses that are most likely to receive
    contract award.

    (H) Any ranking of offerors developed by the FAA during the source selection process.

    (I) The reports, evaluations and recommendations of source selection panels, boards, or
    advisory councils.

    (J) Other information based on a case- by-case determination made by the FAA Acquisition
    Executive*, his or her designee, or the Product or Service Team**, that its disclosure would
    jeopardize the integrity or successful completion of the FAA procurement to which the
    information relates.

    In addition, all source selection information should be clearly marked as such on the cover
    and throughout each individual document.

(3) The term "Federal agency" means the FAA.

(4) The term "Federal agency procurement" means the acquisition (by using competitive or non-
competitive procedures and awarding a contract) of goods or services (including construction)
from non-Federal sources by the FAA using appropriated funds.

(5) The term "contracting officer" means a person who, by appointment in accordance with FAA
policy, has the authority to enter into a FAA contract on behalf of the Government and to make
determinations and findings with respect to such contract.

(6) The term "protest" means a written objection by an interested party to the award or proposed
award of a FAA procurement contract.

(7) The term "official" means the following:

       (A) An employee of the FAA, as defined in the FAA’s Personnel Management
       System.
         (B) An officer (as defined in 5 U.S.C. Section 2104) of any non-FAA federal
         agency (as federal agency is defined in 40 U.S.C. Section 472).

         (C) An employee (as defined in 5 U.S.C. Section 2105) of any non-FAA federal
         agency (as federal agency is defined in 40 U.S.C. Section 472).

         (D) A member of the uniformed services, as defined in 5 U.S.C. Section 2101(3).

(8) The term "other applicable law or regulation" as used at 41 U.S.C. Section 423(e)(3)(A)(iv),
includes the FAA Personnel Management System.

(9) The term "Comptroller General of the United States", as used at 41 U.S.C. Section 423(h)(6),
means the FAA Office of Dispute Resolution for Acquisition.

(10) The term "program manager" as used at 41 U.S.C. Section 423(d)(1)(B), includes a FAA
Product or Service Team** Lead or Acting Lead.

(11) The term "deputy program manager" as used at 41 U.S.C. Section 423(d)(1)(B), includes a
Deputy or Acting Deputy to an FAA Product or Service Team** Lead.

(12) The term "Federal Acquisition Regulation" as used at 41 U.S.C. Section 423(e)(3)(A)(iii),
means the FAA AMS.



*The July 14, 2000 memo approving FAA definitions used "Associate Administrator for Research and
Acquisitions." Due to organizational changes in 2006, this position was abolished. The FAA Acquisition Executive
is an equivalent position.

**The July 14, 2000 memo approving FAA definitions used the term "Integrated Product Team." Due to
organizational changes, this term was not used after 2006. Product or Service Team is a similar structure.



3 Full Text Procurement Integrity Act 41 U.S.C Section 423 Added 10/2010

Below is the full text of the Procurement Integrity Act, 41 U.S.C. Section 423 (omitting only its
subsections (f) and (g), which are not applicable to FAA). This Act, as it applies to the FAA, is to
be read in conjunction with the FAA Procurement Integrity Act definitions (which are also
shown in this Procurement Guidance Section). Please take special notice of 41 U.S.C. Section
423(h) below, which contains "savings provisions," or situations where the Procurement
Integrity Act does not apply.

                          Procurement Integrity Act, 41 U.S.C. Section 423

§ 423. Restrictions on disclosing and obtaining contractor bid or proposal information or
source selection information
(a) Prohibition on disclosing procurement information.

       (1) A person described in paragraph (2) shall not, other than as
       provided by law, knowingly disclose contractor bid or proposal
       information or source selection information before the award of a
       Federal agency procurement contract to which the information
       relates.

       (2) Paragraph (1) applies to any person who -

              (A) is a present or former official of the United
              States, or a person who is acting or has acted for or
              on behalf of , or who is advising or has advised the
              United States with respect to, a Federal agency
              procurement; and

              (B) by virtue of that office, employment, or
              relationship has or had access to contractor bid or
              proposal information or source selection
              information.

(b) Prohibition on obtaining procurement information. A person shall not, other
than as provided by law, knowingly obtain contractor bid or proposal information
or source selection information before the award of a Federal agency procurement
contract to which the information relates.

(c) Actions required of procurement officers when contacted by offerors regarding
non-Federal employment.

       (1) If an agency official who is participating personally and
       substantially in a Federal agency in a Federal agency procurement
       for a contract in excess of the simplified acquisition threshold
       contracts or is contacted by a person who is a bidder or offeror in
       that Federal agency procurement regarding possible non-Federal
       employment for that official, the official shall -

              (A) promptly report the contract in writing to the
              official’s supervisor and to the designated agency
              ethics official (or designee) of the agency in which
              the official is employee; and

              (B) (i) reject the possibility of non-Federal
              employment; or

                  (ii) disqualify himself or herself from further
              personal and substantial participation in that Federal
              agency procurement until such time as the agency
              has authorized the official to resume participation in
              such procurement, in accordance with the
              requirements of section 208 of title 18, United
              States Code, and applicable agency regulations on
              the grounds that --

                      (I) the person is no longer a bidder or
                      offeror in that Federal agency
                      procurement; or

                      (II) all discussions with the bidder or
                      offeror regarding possible non-
                      Federal employment have terminated
                      without an agreement or arrangement
                      for employment.

       (2) Each report required by this subsection shall be retained by the
       agency for not less that two years following the submission of the
       report. All such §reports shall be made available to the public upon
       request, except that any part of a report that is exempt from the
       disclosure requirements of section 552 of title 5, United States
       Code, under subsection (b)(1) of such section may be withheld
       from disclosure to the public.

       (3) An official who knowingly fails to comply with the
       requirements of this subsection shall be subject to the penalties and
       administrative actions set forth in subsection (e).

       (4) A bidder or offeror who engages in employment discussions
       with an official who is subject to the restrictions of this subsection,
       knowing that the official has not complied with subparagraph (A)
       or (B) of paragraph (1), shall be subject to the penalties and
       administrative actions set forth in subsection (e).

d) Prohibition on former official’s acceptance of compensation from contractor.

       (1) A former official of a Federal agency may not accept
       compensation from a contractor as an employee, officer, director,
       or consultant of the contractor within a period of one year after
       such former official—

              (A) served, at the time of selection of the contractor
              or the award of a contract to that contractor, as the
              procuring contracting officer, the source selection
              authority, a member of the source selection
       evaluation board, or the chief of a financial or
       technical evaluation team in a procurement in which
       that contractor was selected for award of a contract
       in excess of $10,000,000;

       (B) served as the program manager, deputy program
       manager, or administrative contracting officer for a
       contract in excess of $10,000,000 awarded to that
       contractor; or

       (C) personally made for the Federal agency—

               (i) a decision to award a contract,
               subcontract, modification of a
               contract or subcontract, or a task
               order or delivery order in excess of
               $10,000,000 to that contractor;

               (ii) a decision to establish overhead
               or other rates applicable to a contract
               or contracts for that contractor that
               are valued in excess of $10,000,000;

               (iii) a decision to approve issuance of
               a contract payment or payments in
               excess of $10,000,000 to that
               contractor; or

               (iv) a decision to pay or settle a
               claim in excess of $10,000,000 with
               that contractor.

(2) Nothing in paragraph (1) may be construed to prohibit a former
official of a Federal agency from accepting compensation from any
division or affiliate of a contractor that does not produce the same
or similar products or services as the entity of the contractor that is
responsible for the contract referred to in subparagraph (A), (B), or
(C) of such paragraph.

(3) A former official who knowingly accepts compensation in
violation of this subsection shall be subject to penalties and
administrative actions as set forth in subsection (e).

(4) A contractor who provides compensation to a former official
knowing that such compensation is accepted by the former official
       in violation of this subsection shall be subject to penalties and
       administrative actions as set forth in subsection (e).

       (5) Regulations implementing this subsection shall include
       procedures for an official or former official of a Federal agency to
       request advice from the appropriate designated agency ethics
       official regarding whether the official or former official is or would
       be precluded by this subsection from accepting compensation from
       a particular contractor.

(e) Penalties and administrative actions.

       (1) Criminal penalties. Whoever engages in conduct constituting a
       violation of subsection (a) or (b) for the purpose of either—

               (A) exchanging the information covered by such
               subsection for anything of value, or

               (B) obtaining or giving anyone a competitive
               advantage in the award of a Federal agency
               procurement contract, shall be imprisoned for not
               more than 5 years or fined as provided under title
               18, United States Code, or both.

       (2) Civil penalties. The Attorney General may bring a civil action
       in an appropriate United States district court against any person
       who engages in conduct constituting a violation of subsection (a),
       (b), (c), or (d). Upon proof of such conduct by a preponderance of
       the evidence, the person is subject to a civil penalty of not more
       that $50,000 for each violation plus twice the amount of
       compensation which the individual received or offered for the
       prohibited conduct. An organization that engages in such conduct
       is subject to a civil penalty of not more that $500,000 for each
       violation plus twice the amount of compensation which the
       organization received or offered for the prohibited conduct.

       (3) Administrative actions.

               (A) If a Federal agency receives information that a
               contractor or a person has engaged in conduct
               constituting a violation of subsection (a), (b), (c), or
               (d), the Federal agency shall consider taking one or
               more of the following actions, as appropriate:
       (i) Cancellation of the Federal
       agency procurement, if a contract has
       not yet been awarded.

       (ii) Rescission of a contract with
       respect to which -

               (I) the contractor or
               someone acting for
               the contractor has
               been convicted for an
               offense punishable
               under paragraph (1),
               or

               (II) the head of the
               agency that awarded
               the contract has
               determined, based
               upon a preponderance
               of the evidence, that
               the contractor or
               someone acting for
               the contractor has
               engaged in conduct
               constituting such an
               offense.

       (iii) Initiation of suspension or
       debarment proceedings for the
       protection of the Government in
       accordance with procedures in the
       Federal Acquisition Regulation.

       (iv) Initiation of adverse personnel
       action, pursuant to the procedures in
       chapter 75 of title 5, United States
       Code [5 USCS §§ 7501 et seq.], or
       other applicable law or regulation.

(B) If a Federal agency rescinds a contract pursuant
to subparagraph (A) (ii), the United States is
entitled to recover, in addition to any penalty
prescribed by law, the amount expended under the
contract.
                     (C) For purposes of any suspension or debarment
                     proceedings initiated pursuant to subparagraph (A)
                     (iii), engaging in conduct constituting an offense
                     under subsection (a), (b), (c), or (d) affects the
                     present responsibility of a Government contractor or
                     subcontractor.

      [paragraphs (f) and (g) omitted intentionally]

      (h) Savings provisions. This section does not -

             (1) restrict the disclosure of information to, or its receipt by, any
             person or class of persons authorized, in accordance with
             applicable agency regulations or procedures, to receive that
             information;

             (2) restrict a contractor from disclosing its own bid or proposal
             information or the recipient from receiving that information;

             (3) restrict the disclosure or receipt of information relating to a
             Federal agency procurement after it has been canceled by the
             Federal agency before contract award unless the Federal agency
             plans to resume the procurement;

             (4) prohibit individual meetings between a Federal agency official
             and an offeror or potential offeror for, or a recipient of, a contract
             or subcontract under a Federal agency procurement, provided that
             unauthorized disclosure or receipt of contractor bid or proposal
             information or source selection information does not occur;

             (5) authorize the withholding of information from, nor restrict its
             receipt by, Congress, a committee or subcommittee of Congress,
             the Comptroller General, a Federal agency, or an inspector general
             of a Federal agency;

             (6) authorize the withholding of information from, nor restrict its
             receipt by, the Comptroller General of the United States in the
             course of a protest against the award or proposed award of a
             Federal agency procurement contract; or

             (7) limit the applicability of any requirements, sanctions, contract;
             or penalties, and remedies established under any other law or
             regulation.


B Clauses
view contract clauses


C Forms Revised 10/2010

view procurement forms


D Appendix Added 10/2010

1 Administrator's Approval of FAA Procurement Integrity Act Definitions Added 10/2010
1. Background.

As provided by 49 United States Code (U.S.C.) Section 40122(g)(3), effective October 1, 1999,
the Federal Aviation Administration (FAA) is subject to the Procurement Integrity Act (the Act)
(41 U.S.C. Section 423). However, Subsections (f), Definitions, and (g), Limitations on Protests,
both in Section 423, do not apply to the FAA. In lieu of the definitions contained in the
Subsection (f) of the Act, the FAA Administrator was directed by Congress to adopt its own
definitions, consistent with the intent of the FAA’s Acquisition Management System (AMS) and
the Act. These definitions are provided below. (The full text of the Procurement Integrity Act is
shown in the following pages.)
2. Definitions.



As used in 41 U.S.C. Section 423:

(1) The term "contractor bid or proposal information" means any of the following information
submitted to FAA as part of or in connection with a Screening Information Request (SIR) or an
unsolicited proposal, to enter into an FAA procurement contract, if that information has not been
previously made available to the public or disclosed publicly:

(A) Cost or pricing data (as defined in Appendix C of the AMS).

(B) Indirect costs and direct labor rates.

(C) Proprietary information about manufacturing processes, operations, or techniques marked by
the contractor in accordance with applicable law or regulation.

(D) Information marked by the contractor in accordance with (1) AMS Clause 3.2.2.3-16,
"Restriction on Disclosure and Use of Data," or (2) other applicable law and regulation.

(2) The term "source selection information" means any of the following information prepared for
use by the FAA for the purpose of evaluating documentation, information, presentations,
proposals, or binding offers which an offeror submits in response to a Screening Information
Request (SIR), or in an unsolicited proposal, to enter into an FAA procurement contract, if that
information has not been previously made available to the public or disclosed publicly:

(A) Proposed costs or prices submitted in response to a FAA SIR, or lists of those proposed costs
or prices.

(B) Source selection plans.

(C) Technical evaluation plans.

(D) Technical evaluations of responses to SIRs or unsolicited proposals.

(E) Cost or price evaluation plans.

(F) Cost or price evaluations of responses to SIRs or unsolicited proposals.

(G) Down select determinations identifying SIR responses that are most likely to receive contract
award.

(H) Any ranking of offerors developed by the FAA during the source selection process.
(I) The reports, evaluations and recommendations of source selection panels, boards, or advisory
councils.

(J) Other information based on a case- by-case determination made by the FAA Associate
Administrator for Research and Acquisition, his or her designee, or the Integrated Product Team,
that its disclosure would jeopardize the integrity or successful completion of the FAA
procurement to which the information relates.

In addition, all source selection information should be clearly marked as such on the cover and
throughout each individual document.

(3) The term "Federal agency" means the FAA.

(4) The term "Federal agency procurement" means the acquisition (by using competitive or non-
competitive procedures and awarding a contract) of goods or services (including construction)
from non-Federal sources by the FAA using appropriated funds.

(5) The term "contracting officer" means a person who, by appointment in accordance with FAA
policy, has the authority to enter into a FAA contract on behalf of the Government and to make
determinations and findings with respect to such contract.

(6) The term "protest" means a written objection by an interested party to the award or proposed
award of a FAA procurement contract.

(7) The term "official" means the following:

(A) An employee of the FAA, as defined in the FAA’s Personnel Management System.

(B) An officer (as defined in 5 U.S.C. Section 2104) of any non-FAA federal agency (as federal
agency is defined in 40 U.S.C. Section 472).

(C) An employee (as defined in 5 U.S.C. Section 2105) of any non-FAA federal agency (as
federal agency is defined in 40 U.S.C. Section 472).

(D) A member of the uniformed services, as defined in 5 U.S.C. Section 2101(3).

(8) The term "other applicable law or regulation" as used at 41 U.S.C. Section 423(e)(3)(A)(iv),
includes the FAA Personnel Management System.

(9) The term "Comptroller General of the United States", as used at 41 U.S.C. Section 423(h)(6),
means the FAA Office of Dispute Resolution for Acquisition.

(10) The term "program manager" as used at 41 U.S.C. Section 423(d)(1)(B), includes a FAA
Integrated Product Team (IPT) Lead or Acting Lead, or a Product Team (PT) Lead or Acting
Lead.
(11) The term "deputy program manager" as used at 41 U.S.C. Section 423(d)(1)(B), includes a
Deputy or Acting Deputy to an FAA IPT Lead, or a Deputy or Acting Deputy to a PT Lead.

(12) The term "Federal Acquisition Regulation" as used at 41 U.S.C. Section 423(e)(3)(A)(iii),
means the FAA AMS.



3. Full Text of the Procurement Integrity Act, 49 U.S.C. Section 423.

Below is the full text of the Procurement Integrity Act, 49 U.S.C. Section 423 (omitting only its
Subsections (f) and (g), which are not applicable to FAA). This Act, as it applies to the FAA, is to
be read in conjunction with the FAA Procurement Integrity Act definitions.

§ 423. Restrictions on disclosing and obtaining contractor bid or proposal information or
source selection information

(a) Prohibition on disclosing procurement information.

(1) A person described in paragraph (2) shall not, other than as provided by law, knowingly
disclose contractor bid or proposal information or source selection information before the award
of a Federal agency procurement contract to which the information relates.

(2) Paragraph (1) applies to any person who -

(A) is a present or former official of the United States, or a person who is acting or has acted for
or on behalf of , or who is advising or has advised the United States with respect to, a Federal
agency procurement; and

(B) by virtue of that office, employment, or relationship has or had access to contractor bid or
proposal information or source selection information.

(b) Prohibition on obtaining procurement information. A person shall not, other than as provided
by law, knowingly obtain contractor bid or proposal information or source selection information
before the award of a Federal agency procurement contract to which the information relates.

(c) Actions required of procurement officers when contacted by offerors regarding non-Federal
employment.

(1) If an agency official who is participating personally and substantially in a Federal agency in a
Federal agency procurement for a contract in excess of the simplified acquisition threshold
contracts or is contacted by a person who is a bidder or offeror in that Federal agency
procurement regarding possible non-Federal employment for that official, the official shall -

(A) promptly report the contract in writing to the official’s supervisor and to the designated
agency ethics official (or designee) of the agency in which the official is employee; and
(B) (i) reject the possibility of non-Federal employment; or

     (ii) disqualify himself or herself from further personal and substantial participation in that
Federal agency procurement until such time as the agency has authorized the official to resume
participation in such procurement, in accordance with the requirements of section 208 of title 18,
United States Code, and applicable agency regulations on the grounds that --

(I) the person is no longer a bidder or offeror in that Federal agency procurement; or

(II) all discussions with the bidder or offeror regarding possible non-Federal employment have
terminated without an agreement or arrangement for employment.

(2) Each report required by this subsection shall be retained by the agency for not less that two
years following the submission of the report. All such §reports shall be made available to the
public upon request, except that any part of a report that is exempt from the disclosure
requirements of section 552 of title 5, United States Code, under subsection (b)(1) of such
section may be withheld from disclosure to the public.

(3) An official who knowingly fails to comply with the requirements of this subsection shall be
subject to the penalties and administrative actions set forth in subsection (e).

(4) A bidder or offeror who engages in employment discussions with an official who is subject to
the restrictions of this subsection, knowing that the official has not complied with subparagraph
(A) or (B) of paragraph (1), shall be subject to the penalties and administrative actions set forth
in subsection (e).

d) Prohibition on former official’s acceptance of compensation from contractor.

(1) A former official of a Federal agency may not accept compensation from a contractor as an
employee, officer, director, or consultant of the contractor within a period of one year after such
former official—

(A) served, at the time of selection of the contractor or the award of a contract to that contractor,
as the procuring contracting officer, the source selection authority, a member of the source
selection evaluation board, or the chief of a financial or technical evaluation team in a
procurement in which that contractor was selected for award of a contract in excess of
$10,000,000;

(B) served as the program manager, deputy program manager, or administrative contracting
officer for a contract in excess of $10,000,000 awarded to that contractor; or

(C) personally made for the Federal agency—

(i) a decision to award a contract, subcontract, modification of a contract or subcontract, or a task
order or delivery order in excess of $10,000,000 to that contractor;
(ii) a decision to establish overhead or other rates applicable to a contract or contracts for that
contractor that are valued in excess of $10,000,000;

(iii) a decision to approve issuance of a contract payment or payments in excess of $10,000,000
to that contractor; or

(iv) a decision to pay or settle a claim in excess of $10,000,000 with that contractor.

(2) Nothing in paragraph (1) may be construed to prohibit a former official of a Federal agency
from accepting compensation from any division or affiliate of a contractor that does not produce
the same or similar products or services as the entity of the contractor that is responsible for the
contract referred to in subparagraph (A), (B), or (C) of such paragraph.

(3) A former official who knowingly accepts compensation in violation of this subsection shall
be subject to penalties and administrative actions as set forth in subsection (e).

(4) A contractor who provides compensation to a former official knowing that such
compensation is accepted by the former official in violation of this subsection shall be subject to
penalties and administrative actions as set forth in subsection (e).

(5) Regulations implementing this subsection shall include procedures for an official or former
official of a Federal agency to request advice from the appropriate designated agency ethics
official regarding whether the official or former official is or would be precluded by this
subsection from accepting compensation from a particular contractor.

(e) Penalties and administrative actions.

(1) Criminal penalties. Whoever engages in conduct constituting a violation of subsection (a) or
(b) for the purpose of either—

(A) exchanging the information covered by such subsection for anything of value, or

(B) obtaining or giving anyone a competitive advantage in the award of a Federal agency
procurement contract, shall be imprisoned for not more than 5 years or fined as provided under
title 18, United States Code, or both.

(2) Civil penalties. The Attorney General may bring a civil action in an appropriate United States
district court against any person who engages in conduct constituting a violation of subsection
(a), (b), (c), or (d). Upon proof of such conduct by a preponderance of the evidence, the person is
subject to a civil penalty of not more that $50,000 for each violation plus twice the amount of
compensation which the individual received or offered for the prohibited conduct. An
organization that engages in such conduct is subject to a civil penalty of not more that $500,000
for each violation plus twice the amount of compensation which the organization received or
offered for the prohibited conduct.

(3) Administrative actions.
(A) If a Federal agency receives information that a contractor or a person has engaged in conduct
constituting a violation of subsection (a), (b), (c), or (d), the Federal agency shall consider taking
one or more of the following actions, as appropriate:

(i) Cancellation of the Federal agency procurement, if a contract has not yet been awarded.

(ii) Rescission of a contract with respect to which -

(I) the contractor or someone acting for the contractor has been convicted for an offense
punishable under paragraph (1), or

(II) the head of the agency that awarded the contract has determined, based upon a
preponderance of the evidence, that the contractor or someone acting for the contractor has
engaged in conduct constituting such an offense.

(iii) Initiation of suspension or debarment proceedings for the protection of the Government in
accordance with procedures in the Federal Acquisition Regulation.

(iv) Initiation of adverse personnel action, pursuant to the procedures in chapter 75 of title 5,
United States Code [5 USCS §§ 7501 et seq.], or other applicable law or regulation.

(B) If a Federal agency rescinds a contract pursuant to subparagraph (A) (ii), the United States is
entitled to recover, in addition to any penalty prescribed by law, the amount expended under the
contract.

(C) For purposes of any suspension or debarment proceedings initiated pursuant to subparagraph
(A) (iii), engaging in conduct constituting an offense under subsection (a), (b), (c), or (d) affects
the present responsibility of a Government contractor or subcontractor.

(h) Savings provisions. This section does not -

(1) restrict the disclosure of information to, or its receipt by, any person or class of persons
authorized, in accordance with applicable agency regulations or procedures, to receive that
information;

(2) restrict a contractor from disclosing its own bid or proposal information or the recipient from
receiving that information;

(3) restrict the disclosure or receipt of information relating to a Federal agency procurement after
it has been canceled by the Federal agency before contract award unless the Federal agency plans
to resume the procurement;

(4) prohibit individual meetings between a Federal agency official and an offeror or potential
offeror for, or a recipient of, a contract or subcontract under a Federal agency procurement,
provided that unauthorized disclosure or receipt of contractor bid or proposal information or
source selection information does not occur;
(5) authorize the withholding of information from, nor restrict its receipt by, Congress, a
committee or subcommittee of Congress, the Comptroller General, a Federal agency, or an
inspector general of a Federal agency;

(6) authorize the withholding of information from, nor restrict its receipt by, the Comptroller
General of the United States in the course of a protest against the award or proposed award of a
Federal agency procurement contract; or

(7) limit the applicability of any requirements, sanctions, contract; or penalties, and remedies
established under any other law or regulation.
T3.1.9 Electronic Commerce Added 7/2007


A Electronic Commerce and Signature in Contracting Added 7/2007

1 General Added 7/2007

a. The FAA may use electronic commerce and signature when practicable and cost-effective.
With enactment of the Electronic Signatures in Global and National Commerce Act (E-SIGN),
the FAA is encouraged to use electronic contract formation, signatures, and recordkeeping in
commerce. It also establishes legal equivalence between:

        (1) Contracts written on paper and contracts in electronic form;

        (2) Pen-and-ink signatures and electronic signatures; and

        (3) Other legally-required written records and the same information in electronic
        form.

b. Definitions.

        (1) Electronic Commerce: Electronic techniques for accomplishing business
        transactions, including, but not limited to, electronic mail or messaging, World
        Wide Web technology, electronic bulletin boards, and electronic data interchange.

        (2) Electronic Signature: A method of electronically signing an electronic
        message that identifies and authenticates a particular person as the source of the
        electronic message; and indicates such person's approval of the information
        contained in the electronic message.


2 Considerations For Using Technology and Systems Added 7/2007

a. Before using electronic commerce technology, the Contracting Officer (CO) must consult with
legal counsel, information security, and information technology experts to ensure the proposed
technology is legally supportable, does not weaken security of current systems, is consistent with
enterprise-level standards, and does not utilize unsupported or outdated technology.

b. When selecting a system for electronic commerce or signature, the procurement team (CO,
program official, legal counsel, and other supporting staff) must ensure the system technology:

        (1) Represents the best value to the FAA;

        (2) Considers the full or partial use of current systems;
        (3) Does not weaken the security of current systems or support outdated technology;

        (4) Provides a means of access by all concerns, to the extent practicable;

        (5) Properly identifies users and protects sensitive data from unauthorized access; and

        (6) Does not violate any law, regulation, Executive Order, or FAA policy.

c. The CO must ensure that an electronic commerce and signature system is capable of ensuring
authentication and confidentiality commensurate with the risk and magnitude of the harm of loss,
misuse, or unauthorized access to or modification of the information. The system must ensure
that the records have:

        (1) Authenticity: Ensures that the record is what it purports to be and to have been
        created by the person who claims to have created and sent it;

        (2) Integrity: The records are complete and unaltered;

        (3) Reliability: Contents can be trusted to be a full and accurate representation of the
        transaction(s) to provide for a valid audit trail; and

        (4) Usability: Records can be located, retrieved, presented, and interpreted.

d. All parties (FAA and offeror/contractor) that will use the electronic commerce technology
must agree in advance to the particular methodologies and format to be used, and to what extent
the contractual action will utilize electronic commerce. This CO must document this agreement.

e. The CO may authorize use of alternative forms of media, such as hardcopy drawings and
schematic models, to supplement use of electronic commerce in a procurement action.

f. Records management and retention policies in FAA Order 1350.15C still apply to electronic
commerce, and disposal guidelines must be strictly followed.


3 Electronic Signature Added 7/2007

a. Electronic signatures may be accomplished by several technologies, to include:

        (1) Personal Identification Number (PIN) or passwords;

        (2) Digital signatures;

        (3) Smart cards; and

        (4) Biometrics.
b. The CO must ensure that the name of the electronic signer and the date when the signature
was executed are included as part of any electronic record.


B Clauses Added 7/2007

view contract clauses


C Forms Added 7/2007

view procurement forms
T3.2.1 - Procurement Planning Revised 4/2009


A Procurement Request (PR) Revised 7/2007

1 Purpose of a Procurement Request Package Revised 7/2007

A procurement request (PR) package initiates acquisition of supplies, equipment, real property,
utilities, material, systems, services, or construction. It is the basis for a Contracting Officer
(CO) to plan, solicit, and award a contract, purchase order, delivery/task order, agreement, lease,
modification, or other procurement action. The PR package is used to define the requestor’s
requirements so the CO can acquire supplies, real property, utilities, and services from or
through other Government agencies, private and public organizations and institutions, and
commercial vendors.


2 Content of PR Package Revised 7/2008

a. The program official with the requirement to be satisfied through a procurement action
prepares the PR package. The nature, value, and complexity of the requirement determine the
exact content of the package. For example, information needed for a single source contract
modification differs from that required for a systems development requirement to be
competitively procured.

b. As soon as a requirement becomes known, the program official should consult with the
cognizant contracting organization, or CO if known, to determine the specific types of
information needed for an acceptable PR package, and when the information must be provided.
Much of the information in a PR package is the foundation for a contractual instrument, so it
should be complete in all essential aspects. The Estimated Acquisition Lead-Time chart (see
AMS Procurement Forms) may serve as a planning tool for both the contracting organization and
program official to estimate lead-times for the various milestones applicable to a procurement.

c. The following list represents information and documentation that may be required for a PR
package. This list is not all-inclusive nor will each item below apply to every procurement
action:

       (1) Requisition committing funds

       (2) Statement of work, specification, purchase description, drawings, or other
       appropriate technical description of the requirement

       (3) Technical data items (such software design documents or test plans) to be delivered,
       Data Item Descriptions (defining data content, format, preparation instructions, and
       intended use), and Contract Data Requirements List
(4) Independent Government Cost Estimate

(5) List of potential vendors and addresses (including incumbent contractor, if
applicable)

(6) Delivery destination or place of performance and delivery date or period of
performance (and optional quantities or periods)

(7) Method and place of inspection and acceptance

(8) List of Government furnished property or information

(9) First article testing requirements

(10) Federal standards that must be met, e.g., energy, environment, health, and safety

(11) Physical, personnel, and information system security requirements

(12) Contractor Personnel Position Risk and Sensitivity Level Determination- FAA
Form 1600.77

(13) Classified information or sensitive unclassified information handling requirements

(14) Requirement for vendor’s descriptive literature or product samples

(15) Brand name or equal or brand name mandatory justification

(16) Warranty requirements which are over and above generally accepted warranty
included with the purchase of an item/service

(17) Liquidated damages justification

(18) Requirement for value engineering provisions

(19) Privacy Act compliance determination

(20) Section 508 Rehabilitation Act determination of non-availability or undue burden

(21) Reprocurement data requirements, spare/repair parts lists, or other special rights

(22) Information about use of existing patents or copyrights

(23) Performance or payment bond requirements

(24) Requirement for insurance coverage or special indemnification
       (25) Support services labor categories and description of minimum qualifications

       (26) Support services single source justification

       (27) Requirement for key personnel clause

       (28) Requirement for Government consent to subcontracting clause

       (29) Personal services justification

       (30) Single source justification

       (31) Chief Financial Officer’s approval- Over $10 million (Note: The contracting office
       may accept a PR that lacks the Chief Financial Officer's (CFO) approval for applicable
       procurements over $10 million; however, the CFO approval must be received by the CO
       prior to the issuance of the Request for Offer (RFO))

       (32) Chief Information Officer’s approval for information technology over $250,000

       (33) Draft technical evaluation factors

       (34) Draft technical proposal instructions

       (35) Requirements for earned value management system, reports, and integrated baseline
       reviews

d. The program official submits the PR package to the appropriate contracting office, or assigned
CO if known. Unless otherwise required by local procedures implemented by mutual agreement
between the PR-initiating organization and contracting office, documents in the PR package are
in electronic format and annotated with a PR number and project title. Materials accompanying
a PR package that cannot be provided in electronic format, such as drawings, are delivered to the
appropriate contracting office or assigned CO, and labeled with PR number, project title, and
location.


3 Review by Chief Information Officer Added 7/2007

a. The Chief Information Officer (CIO) must review and approve proposed procurement actions
for information technology and service resources that are estimated to exceed $250,000 and
would result in a new or modified:

       (1) Contract;

       (2) Order, such as those issued through a Federal Supply Schedule (FSS); or

       (3) Agreement, to include interagency and intra-agency agreements.
b. Information Resources.

       (1) Equipment or interconnected system or subsystem of equipment, that is used in the
       automatic acquisition, storage, manipulation, management, movement, control, display,
       switching, interchange, transmission, or reception of data or information by the FAA.

       (2) Information resources include:

              (a) Services (including support services):

              (b) Computers;

              (c) Ancillary equipment;

              (d) Software; and

              (e) Firmware and similar procedures.

       (3) Information resources do not include any equipment that is acquired by a Federal
       contractor incidental to a Federal contract.

c. Review Process.

       (1) For those proposed procurement actions for information technology and service
       resources that are estimated to exceed $250,000, the program official must submit the
       following information to AIO-3 for review:

              (a) Statement of Work (SOW) or requirements documentation;

              (b) Cost or price information, to include an independent Government cost
              estimate (IGCE) when required; and

              (c) Documentation of market research conducted.

       (2) The CIO review package may be sent to AIO-3 electronically through e-mail or in
       hardcopy form.

       (3) Once approved by the CIO, the program official may then prepare the requisition.

       (4) Prior to submission of the requisition to the contracting office, the program office
       must note the date of the CIO's approval in the body of the requisition.

d. Goals of CIO Review.

       (1) Ensure that goals of the FAA Flight Plan are addressed in procurements involving
       information resources.
       (2) Prevent redundant procurements.

       (3) Ensure that the resource is compatible with the FAA's current or planned
       Enterprise Architecture.

       (4) Ensure that information technology resources support FAA Business Processes.

       (5) Promote and ensure information systems security.

       (6) Identify potential savings or efficiencies.


4 PRISM-Generated Requisition Revised 7/2007

a. A requisition provides basic information, such as appropriation data, item description, place of
performance, and quantity/dollars needed to begin a procurement action. It is also the means of
reserving funds for the procurement. Program officials must prepare requisitions in PRISM, the
FAA’s automated requisitioning and purchasing system. Contracting offices cannot accept
manually prepared Form DOT F-4200.1, "Procurement Request,” equivalent hard copy PR
forms, or manually signed PRISM-generated forms.

b. Electronic Routing. Requisition review, funds certification, and approval are through
electronic routing in PRISM and have the same force and effect as manual signatures.

c. Requisition Control and Numbering. The functionality of PRISM governs requisition
numbering in accordance with AMS Procurement Guidance T3.13.1. Refer to PRISM business
process solution “Award Types and PRISM Document Numbering Masks” for further
information.

d. Requisition Amendment/Modification. If additional funds are needed, the program official
should either issue an amendment to the requisition prior to an award being released or should
create a requisition for modification after the award is released. Fund certification, review and
approval are required for both an amendment or requisition for modification. When the amount
obligated for the contractual action is less than the amount funded on the requisition, the program
official must decommit excess funds. Because the original purpose of the requisition is
considered complete, the requisition cannot later be amended to use the remaining funds either
for the original purpose or for another purpose.

e. Canceling a Requisition. Program officials may cancel a requisition prior to award by
creating an amendment to decommit funding.

f. Funds Estimate. The requisition must indicate the total estimated cost of the requirement. For
basic requisitions for new contracts, this includes the estimated amount of the basic contract and
all planned options and any other requirements that would not be included in or funded as part of
the basic contract. For contract modifications, this amount will be the total estimated cost of the
action involved. For requisition amendments and requisition for modifications, whether for new
contracts or modifications, the estimated amount will be the net amount of any change to the
estimate stated in the basic requisition, and in addition to the net amount, identify in the body of
the requisition the cumulative total estimated cost.

g. Required Quantity. This is the FAA's need, present and projected, for which funding is or will
be available. Quantity discounts and transportation costs must be considered when determining
required quantity of supplies. Quantities should not include those for which there are no funded
requirements, or for options for which FAA has little expectation of exercising. For indefinite
delivery/indefinite quantity (ID/IQ) contracts, identify realistic minimum and maximum
quantities. For indefinite delivery/requirements contracts, the total estimated dollar amount for
the requisition should be based on the total estimated quantity. The dollar amount on the
requisition should cover the minimum quantity.

h. For detailed instructions on preparing a requisition, program officials should refer to the
PRISM Requisitioner Guide and Business Processes and Policy, available on-line at:
https://intranet.faa.gov/prism/training/guideindex.htm (FAA only)


5 Funds Certification Revised 7/2008

a. The requisition must include funds certification if it commits funds to be obligated later on a
contractual instrument. Funds certification verifies funds are reserved and certified as available,
or funds are to be deobligated on an award or decommitted on a requisition. Funds need not be
certified on individual requisitions when "bulk funding" is used for Blanket Purchase
Agreements (BPA).

b. The person certifying funds must be designated in writing in accordance with written
procedures of the organization issuing the requisition, and must be instructed by that
organization on his or her responsibilities, duties and authority limits.

c. An authorized requisitioner or approver may also certify funds when local conditions, such as
remoteness or a small facility, make it necessary, provided: written local procedures authorize
this practice and establish reasonable maximum dollar levels for combined funds certification
and approval or requisitioning authority, and include monitoring and oversight procedures to
ensure propriety of all such actions.

d. Additional guidance and related business processes for funds certification can be found at the
PRISM website (https://intranet.faa.gov/prism/training/guideindex.htm FAA only).


6 Requisition Approval Levels Revised 7/2008

a. Only designated FAA employees can approve a requisition. Approval levels are tied to the
total estimated amount of the requisition to be approved, as follows:

        (1)Washington Headquarters
               (a) Over $500,000--Office Head, Director, Product or Service Team Lead, or
               equivalent or higher position.

               (b) Over $250,000 to $500,000--Division Manager or equivalent position.

               (c) Up to $250,000--Branch Manager or equivalent position.

       For Washington Headquarters, an Office Head, Director, Product or Service Team Lead,
       or equivalent position, as applicable, may delegate via memorandum approval levels
       differing from the above.

       (2) Service Areas, Regions, and Centers. Organizations approving requisitions within
       service areas, regions, and centers may establish written local requisition approval levels.
       Program officials should contact their local contracting office for information about
       approval levels.

b. Key duties and responsibilities for requisitioners, fund certifiers, approving officials, and those
obligating funds (i.e. COs or others with delegated procurement authority) must be separated
among individuals. Due to local conditions, some duties may need to be provided by the same
individual; however the following conditions will always apply in the processing of a requisition:

       (1) An individual must never perform all duties;

       (2) A requisitioner may be the fund certifier for the same requisition;

       (3) An approving official and/or fund certifier may perform both approval and fund
       certification for the same requisition;

       (4) A requisitioner must not be the approving official and/or CO for the same requisition;
       and

       (5) A CO must never be the approving official or requisitioner for the same requisition.

c. Requisition approvers should refer to PRISM guidance and business processes found at the
PRISM website (https://intranet.faa.gov/prism/training/guideindex.htm FAA only).


7 Describing Requirements Revised 7/2007

a. Technical Description. An accurate technical description of the requirement is a critical
element of a PR package and key to ensuring FAA’s needs are satisfied. The program official
prepares, to the extent possible, a comprehensive statement of work, specification, drawings or
other description of the product or service to avoid any misinterpretation by prospective vendors
about FAA’s requirements. The technical description defines valid and minimum needs of the
FAA, and is not written in a way that unduly restricts competition. See AMS Procurement
Guidance T3.2.2.8, "Describing Needs" for additional information.
       (1) Supplies or Equipment. For supplies or equipment, the description should cover as
       wide a range of commercially available and proven products as possible. It should avoid
       requirements for special manufacture, or requirements that may unnecessarily restrict
       competition. In this way, a broad competitive base will be possible, prices will be held to
       a minimum, and good relations with offerors will be promoted.

       (2) Services. For services to be performed in accordance with a statement of work
       (SOW), the SOW addresses:

              (a) What is the contractor to do?

              (b) When is the contractor to perform the tasks?

              (c) Who (qualifications and experience) should perform the tasks?

              (d) Where are the tasks to be performed?


8 Independent Government Cost Estimate Revised 1/2010

a. An independent Government cost estimate (IGCE) describes how much FAA could reasonably
expect to pay for needed supplies or services. The IGCE is an internal Government estimate,
supported by factual or reasoned data and documentation, and serves as: (1) the basis for
reserving funds for the procurement action; (2) a method for comparing cost or price proposed
by offerors; and (3) an objective basis for determining price reasonableness when only one offer
is received in response to a solicitation. The program official prepares the IGCE.

b. An IGCE includes a breakdown of major elements of cost, by category such as labor, material,
equipment, subcontracts, travel, overhead, and profit.

c. An IGCE is required for any anticipated procurement action (to include modifications) whose
total estimated value is $100,000 or more, except for:

       (1) Modifications exercising priced options or providing incremental funding;

       (2) Delivery orders for priced services or supplies under an indefinite-delivery
       contract; or

       (3) Acquisition of real property (i.e., land or space).

d. The CO may require an IGCE for those procurement actions (to include modifications)
anticipated to be less than $100,000.

e. The estimate and supporting documentation is for internal use only. It should be made
available only on a need to know basis and must not be provided to any potential offeror. An
IGCE must not be based on information furnished by any potential vendor that may be
competing for the requirement or considered for award. See AMS Procurement Guidance
T.3.2.3 "Cost and Price Methodology" and "FAA Pricing Handbook" for detailed information
about preparing an IGCE.


9 PR Package Clearances, Justifications and Other Documentation Revised 4/2009

The program official furnishes evidence of certain required clearances, approvals, and
justifications with the PR package. This information varies, depending on the nature of
requirement, procurement strategy, and dollar value. The program official should consult with
the CO to determine applicability of each of the below clearances, documentation, and approvals
to the particular requirement. Documentation or other evidence for the below forms part of the
PR package (the below is not all inclusive nor will it apply to each procurement action):

a. Chief Financial Officer Approval. For a single or cumulative expenditure over $10M, the CO
must receive evidence of the Chief Financial Officer's (CFO) approval of the procurement prior
to issuing a Request for Offer (RFO). (See AMS Procurement Guidance T3.2.4 "Chief Financial
Officer Requirements" for additional information.)

b. Accountable Personal Property. FAA's financial standards and annual audit require accurate
recording of personal property acquisitions. Before creating a requisition in PRISM, the program
official must establish appropriate projects and tasks in the DELPHI Project Accounting (PA)
module. Each line item on a requisition must have at least one (but can have more than one)
project and task associated with it. The CO will use the line item structure contained in the
requisition when setting up the Contract Line Item Number (CLIN) structure.

c. Government Furnished Property, Information, or Material. The PR package identifies
Government property, information, or material. FAA property is managed, transferred, and
added to FAA records through the Automated Inventory Tracking System (AITS). Any special
restrictions or conditions, such as property provided "as is" security issues, or special handling
should also be specified in the PR package.

d. Personal Property from Commercial Sources. Before initiating a requisition to obtain personal
property, program officials must determine if the property is available for reuse from an FAA or
other Government source, as required by FAA Order 4800.2C (May 31, 1996) and "FAA
Reutilization and Disposition Process & Procedure Guide," dated October 2006, available on-
line at: http://ats.awa.faa.gov/aaf/afz/500/processguides/processguides.html

e. Project Materiel. Materiel for projects is requisitioned through the Logistics and Inventory
System (LIS) Project Materiel Management System (PMMS). For further information on
acquiring materiel, refer to the "Project/Materiel Management Desk Guide" available online at:
https://intranet.faa.gov/FaaEmployees/org/staffoffices/aba/assets/material_management/ (FAA
only).

f. Section 508 of the Rehabilitation Act. Acquisition of electronic and information technology
(EIT) must comply with Section 508 requirements for accessibility. The program official must
document EIT non-availability, including market research performed and standards that cannot
be met. For further information, see AMS Procurement Guidance T3.2.2 "Source Selection," or
the FAA Section 508 website at:
https://intranet.faa.gov/faaemployees/org/staffoffices/aio/programs/ites/section_508/ (FAA
only).

g. Personnel Security. For individuals that may need access to FAA facilities, sensitive
unclassified information, or resources, the contract security clause contains sufficient language to
meet that objective. For specific guidance and regulations, see the applicable personnel security
orders (FAA Order 1600.1E Personnel Security Program and FAA Order 1600.72A Contractor
and Industrial Security Program). FAA Form 1600-77, "Contractor Position Risk/Sensitivity
Level Designation Record" is used by the Operating Office to make initial position
risk/sensitivity level designations based on the initial list of positions and the statement of work.

h. Sensitive Unclassified Information. The program official must coordinate with the local FAA
Servicing Security Element (SSE) for the minimum standards to mark, store, control, transmit,
and destroy Sensitive Unclassified Information, For Official Use Only, Sensitive Security
Information, or unclassified information that may be withheld from public release. (See FAA
Order 1600.75 or AMS Procurement Guidance T3.14.1 "Security" for additional information.)

i. Classified Information. The PR package should identify any requirements for handling of
classified materials or for access of contractor personnel to classified information. (See FAA
Order 1600.2E Safeguarding Classified National Security Information for additional
information).

j. Information Systems Security. The FAA must ensure that all information systems are protected
from threats to integrity, availability, and confidentiality. (See FAA Order 1370.82A for
additional information.)

k. Paperwork Reduction Act. The FAA must obtain approval to collect information through
questionnaires, focus groups, telephone surveys, applications, performance reports, customer
satisfaction surveys, studies and evaluations, interviews, forms, and other means of requesting
information from 10 or more respondents. The program official must first coordinate
requirements through the FAA Information Clearance Officer (AIO-20), and then obtain
clearance from Office of Management and Budget (OMB).

l. Privacy Act. When a requirement involves the design, development, or operation of a system
of records on individuals for an FAA function, the statement of work must identify FAA rules
and regulations implementing the Privacy Act. (See FAA Order 1280.1A ;Protecting Privacy of
Information About Individuals.)

m. Printing or Duplicating or Purchase or Lease of Copying Equipment. For printing or
duplicating services to be performed either by Government Printing Office (GPO) or outside
printing businesses, program officials must coordinate with the cognizant FAA printing
management office. Purchase or lease of duplicators or electronic copiers over $100,000 must be
approved: for Headquarters acquisitions, coordinate with the Corporate Information Division
(ABA-10); Region, Center and Service Area acquisitions, coordinate with the servicing printing
management organization.

n. NAS Specifications. Specifications for acquisitions under the Capital Improvement Program
(CIP) are baselined and under configuration control. A requisition for NAS program
specification change must include evidence of approval by the NAS Configuration Control
Board.

o. Options. If optional quantities or services are to be included, the PR package should state the
basis for evaluating the offerors' proposals. The PR package should indicate whether it is
expected that offers will be evaluated for award purposes only on the basis of the price for the
basic requirement exclusive of options, or price inclusive of options.

p. Warranty. Warranties should be cost beneficial. For other than standard commercial warranty
generally accepted as included with basic purchase price, the PR package should include an
analysis of the costs of a warranty and its administration, versus the benefits of liability deferral.

q. Liquidated Damages. Before liquidated damages provisions may be included in a contract, the
program official must adequately justify and document the basis for amounts to be assessed. (See
AMS Procurement Guidance T3.8.7 "Construction Contracting" for more information.)

r. Brand Name Products. When a brand name or equal description is used, the PR package must
state the brand name product and salient physical, functional, performance, and interoperability
or interface characteristics of the brand name product so that vendors may offer alternative but
equal products. Brand name-mandatory descriptions identify a specific make, model, or catalog
number, and manufacturer of a product. This type of description differs from brand name or
equal because vendors may not provide an equal item. For brand name-mandatory, a single
source justification is required with the PR package. (See AMS Procurement Guidance T3.2.2.8
"Describing Needs" for more information.)

s. Recovered Materials. Program officials are responsible for defining product specifications,
utilizing FAA's minimum content standards or preference standards, when procuring EPA-
designated items. The program official should provide a written determination certifying that the
statement of work/specifications for materials/services specified complies with the FAA's
preference standards for recovered materials. (See AMS Procurement Guidance T3.6.3
"Environment, Conservation and Energy" for additional information.)

t. Recycled Content. Purchases of EPA-designated recycled content products must meet or
exceed EPA guideline standards, unless price, performance, or availability justifies not doing so.
The program official should document this determination. (See AMS Procurement Guidance
T3.6.3 "Environment, Conservation and Energy" for additional information.)

u. Capital Versus Non-Capital Lease Determination. The FAA is required to capitalize certain
improvements in both owned and leased space. In addition, the FAA (to include the Operating
Office, RECO, and accounting) is required to make a determination as to whether leases
(including real property leases) are capital or operating leases and insure they are recorded and
filed accordingly. (See AMS Real Estate Guidance 3.1.5 "Capitalization" for additional
information and applicable forms.)

v. Personal Services. Personal services contracts are permissible if appropriately justified and
approved by senior management. The PR package must include evidence of this approval. (See
AMS Procurement Guidance T3.8.2 "Service Contracting" for more information.)

w. Single Source Justification. When in FAA's best interests, a single source procurement may
be appropriate. The program official should prepare a justification documenting the rational basis
for using a single vendor. (See AMS Procurement Guidance T3.2.2.4 "Single Source" for
additional information.)

x. Technical Evaluation Factors/Plan. Technical evaluation factors must be approved before
issuing a solicitation. The program official must provide the factors and plan for evaluating
technical proposals.

y. Earned Value Management System (EVMS). An earned value management system (EVMS) is
required for projects involving development, modernization, or enhancement estimated at $10M
or more. Program officials should consult with the FAA's EVM Focal Point (AJA-42) to
determine appropriate EVMS certification, review, and reporting requirements. (See AMS
"Earned Value Management Guide" for additional information.)


10 Simplified Purchases Revised 7/2007

a. Purchase Cards. When a requisition is used as the funding document for purchase card
purchases, it must contain certification of availability of funds. (See AMS Procurement
Guidance T3.2.2.5 "Commercial and Simplified Purchase Method" for additional information.)

b. Blanket Purchase Agreement (BPA). A requisition may be issued for a basic BPA, but is not
necessary for individual orders (termed "calls") against the BPA. One or more BPAs may be
established in response to a requisition. The requisition identifies types of supplies or services to
be purchased under the BPA, suggested sources of supply, estimated grand total and individual
call dollar limitations, and person(s) to be authorized by the CO to make purchases. BPA calls
serve as the obligating documents and a requisition will be required to issue the first call. If the
BPA call is funded for a period of less than one year, a requisition for modification will be
required to increase the funding.


11 Lease or Rental Space Revised 7/2007

a. Headquarters. Requirements for short-term lease, or rental, of conference space, or the long-
term lease of other space (e.g., office, storage or special purpose), in commercial establishments
in the Washington, D. C. metropolitan area, and requests for any GSA acquired space must be
coordinated through the Headquarters Facilities Management Staff (ALO-100). The results of
this coordination must be indicated on the requisition or an attachment.
b. Regions and Centers. Requirements for short-term lease of conference space not acquired
through a purchase card should be coordinated with the real property organization of the
applicable Region or Center office. The results of that coordination must be indicated in the
requisition or an attachment.


12 Logistics Center Supply Support Revised 7/2007

Supply Support Program requirements are processed using the Logistics Inventory System (LIS)
at the FAA Logistics Center. Requisitioning through LIS, coordination, review, certification,
and approval signature are completed electronically.


13 Real Property Revised 4/2009

a. Real Property Responsibilities. For the regions and centers, the Real Estate and Utilities
Branch, or for Washington Headquarters, the Facilities Management Staff (ALO-100), are the
primary contracting offices for the acquisition, management, and disposal of real estate,
including utilities. In requests for acquisition (i.e. lease land or space), management, or disposal
of real estate, or for acquisition of utilities services, the requiring office should initially contact
and provide the requirements to the Real Estate Branch. For further information on submitting
program office requirements to Real Estate, see AMS Policy 4.2. The requesting office will
complete the requisition itself later, after cost information becomes available for its
completion. Initially, cost information would not be available, and remain to be developed in
consultation with the Real Estate Branch. A representative of the Real Estate Branch should be
included at every stage in the real property acquisition, management, and disposal process,
whether this is to make initial inquiry, to make contact with the property owner or his/her
representative, to approve required audit reports, or for other steps in the process.

b. General. The requisition should include the name, address and telephone number of the
property owner (or his/her representative), if known, and a record of any and all contacts with the
owner/representative. Remember however, that contacts with owner/representative should be
made only by the Real Estate Branch. As a minimum, requisitions for real property should
contain the information described below, by type of requirement.

c. Land Acquisition (Purchase or Lease). For such acquisitions, the PR package should include
information for the RECO to begin the acquisition process. Items for any new or renewal lease
action include:

        (1) The projected life of facility (total term requirement for real property).

        (2) Intended use of property (e.g., VASI, REIL, VORTAC, ARSR, ASR), and amount
        and type of all required restrictive easements (e.g., 750, 1000, 1200 or 1500 foot radius;
        trees removed to XX feet).
       (3) The legal description of the site and easements, expressed either in metes and bounds
       or as required by local land registries. If a legal description is not available, a legal
       description can be requested by a separate requisition transmitted to the Real Estate
       Branch.

       (4) Drawings, to scale, of the property(ies) to be acquired, if available.

       (5) Clearances. Environmental clearances, as follows:

              (a) A statement that due diligence has been applied according to the requirements
              of the Comprehensive Environmental Response Compensation and Liability Act
              (CERCLA) and FAA Order 1050.19B, Environmental Due Diligence Audits
              (EDDA) in the Conduct of FAA Real Property Transactions. Paragraph 1-10 of
              FAA Order 1050.19B describes the EDDA report review and approval
              process. The Real Estate Contracting Officer (RECO) receives the final, signed
              EDDA and places a copy of the report in the real property transaction file. A
              copy of the EDDA report should be included in the PR package, as well as a letter
              of acceptance of the report signed by the requiring office Program
              Manager/Division Manager. When an EDDA is not required, a memorandum
              must be included explaining the rationale for not conducting an EDDA. If the
              EDDA was not conducted as a result of an EDDA waiver request, also include a
              copy of the EDDA waiver request form.

              (b) If it has been decided to acquire a site determined to have hazardous material
              contamination, the PR package should include a statement of justification signed
              by the requiring office Program Manager/Division Manager, together with a
              cost/benefit analysis.

              (c) A statement certifying that an analysis of environmental impacts has been
              accomplished according to FAA Order 1050.1E and the National Environmental
              Policy Act. Environmental analysis may include a Categorical Exclusion
              (CATEX) or Environmental Assessment (EA) - which would culminate in a
              Finding of No Significant Impact (FONSI) or Environmental Impact Statement
              (EIS). These statements must clearly identify any environmental impact
              mitigation required, and the need for additional lease clauses to cover such
              mitigation. The environmental analysis must also identify all environmental
              compliance permits for the project. Examples of permit activities are: wetlands
              permits from the Army Corps of Engineers, land use permits, special area, water
              use, and other local, federal and state permits as necessary.

d. Space Acquisition. For space acquisitions, the PR package should include the following
information for the RECO to begin the space acquisition process:

       (1) The intended use of the space (e.g., AFS, FSDO).
       (2) A five-year projected staffing chart including the number of authorized positions, by
       job title, which will use the space. Any projected staffing increases must be validated.

       (3) Special Requirements. These include, but are not limited to:

              (a) Authorized private offices;

              (b) Wiring for data lines;

              (c) 24-hour access/HVAC requirements;

              (d) Temperature and humidity level limits;

              (e) Local Area Network (LAN) rooms;

              (f) Computer Based Instruction (CBI) rooms;

              (g) Written examination room;

              (h) Floor loads and types;

              (i) Antennas attached to roof; and

              (j) Special finishes.

       (4) Number of parking spaces required.

       (5) Recommended total lease term (base lease term plus renewal option(s)).

       (6) Delineated area and map depicting the area.

e. Space Alterations/Improvements/Repairs (AIR). For this, the PR package should include:

       (1) A full narrative description of work to be accomplished, supported by a clear sketch
       or drawing of proposed AIR; and

       (2) Other related items, as stated in the paragraph just preceding.

f. Construction. For construction, the PR package should include:

       (1) For Real Property Interests - Land. When the lease or purchase of land is involved,
       include a statement that such lease or purchase has been consummated. In rare
       circumstances, if there is written assurance the property owner will give that real property
       rights, and a written right of entry to begin construction has been provided, the PR may
       be processed if approved by the servicing Real Estate Branch.
         (2) For Real Property Interests - Space. When a servicing contracting activity, that is, the
         contracting office, is requested to obtain construction, modification, alteration, and/or
         repair to leased space or buildings, care should be taken to ensure that the Real Estate
         Branch is involved in such leased space actions. The PR package must:

                  (a) Contain a statement from the servicing real estate organization that approval
                  from the property owner has been secured and the lease amended to cover FAA's
                  requirements; and

                  (b) Comply with all applicable requirements set forth in c.(2) and (3) above.

         (3) Environmental Considerations. These include a statement certifying that all current
         requirements for Environmental Assessment and Due Diligence Audits have been met.
         (See the above paragraph c.(5) on environmental clearances.)

         (4) Utility Requirements. When new or changed utilities, location or service is involved,
         state the status of obtaining utility service and the estimated date of its availability to the
         project.

         (5) Vehicle or Pedestrian Safety. When the contract work will or may affect the traffic or
         safety of vehicles or pedestrians on the right-of-way of a public highway, road, or street
         owned by a governmental body other than the Federal Government, a statement that this
         is the case, and an identification of the governmental body which owns the highway,
         road, or street. For further information, see AMS Real Estate Guidance.


14 Public Utilities Revised 7/2007

a. Minimum Content. The PR package should contain information sufficient to enable the CO to
determine the required type(s) of service, quantity, delivery point(s), time of initial service,
service duration, and the principal characteristics of services. As a minimum, the PR package
should contain the following:

         (1) Technical description or specification of the type, quantity, and quality of service
         required;

         (2) Date by which the service is required;

         (3) Estimated maximum demand, monthly consumption, and annual cost for the first full
         12 months of service;

         (4) Schematic diagram or line drawing showing meter locations and Government
         connection point to utility supplier's system;

         (5) Estimated cost, including: required utility services, any connection charges; and
         contractor installed facilities for replacement utility services; and
       (6) Principal characteristics of service specifications. As a minimum, descriptions of the
       premises, or location to be served, in sufficient detail to clearly establish its identity by
       agency, function and address, as well as the service delivery point, and an attached map
       or drawing showing its exact location.

b. Electrical Service Specifications. The PR package should contain:

       (1) Monthly kilowatt hour (kWh) demand for a typical year;

       (2) Monthly kilowatt-hour (kWh) consumption for a typical year;

       (3) Type of current (AC or DC);

       (4) Number of phases;

       (5) Anticipated load factor;

       (6) Substation primary and secondary voltages, and allowable variations or tolerances;
       and

       (7) Type of metering: (1) demand and/or watt hours, (2) kilovolt-amperes (kva) or
       kilowatts (kW).

c. Water Service Specifications. The PR package should contain:

       (1) The required pressure and type(s) of water required (e.g., potable water, industrial
       water, classified as to extent of required filtration or chemical treatment; or raw water
       [river, lake, well, etc.]); and

       (2) Exact location of connection with utility firm's distribution system.

d. Gas Service Specifications. These specifications should state the supplier's tariff. They should
describe the desired British Thermal Unit (BTU) content, the purity, and the initial and terminal
pressure limitations. They should also include:

       (1) The estimated maximum demand per hour or per day;

       (2) The estimated monthly usage of gas, by months, for a typical year; and

       (3) The exact location of connection with utility firm's distribution system.

e. Sewer Service Specifications. These should specify the types of service required (e.g. sanitary
with primary or secondary treatment, or raw waste disposal; industrial waste disposal; or storm
water drainage). They should also include:
        (1) The size(s) and location(s) of connections between Government and contractor
        systems; and

        (2) The exact location of connection with the utility firm's distribution system.


15 Returning a Deficient PR Package Revised 7/2007

a. The CO may return a deficient PR package without action, or stop work on a pending PR
package until the program official submits any needed supplemental information. Examples of
reasons for returning or stopping work on a deficient PR package include:

        (1) Incomplete or conflicting information between the requisition, specifications,
        drawings, or other solicitation data;

        (2) Unstable requirements due to repeated technical changes to functional capability,
        reliability, maintainability, quality control, or testing requirements;

        (3) Failure to include the appropriate stock number or item code, facility type code, and
        other required data applicable to each accountable item listed; or

        (4) Missing or improper funding citation.

b. In Washington Headquarters, the CO should return a deficient PR package by memorandum,
signed by a Contracts Division branch manager, to the approver of the requisition. The
memorandum should include a brief explanation of deficiencies.

c. In Service Areas, Regions and Centers, COs should return PR packages in accordance with
local procedures.


B Clauses

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C Forms Revised 7/2007

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T3.2.1.2 - Market Analysis Added 10/2006


A Market Research and Analysis Added 10/2006

1 Market Research and Analysis Revised 7/2011

(a) Market research means collecting and analyzing information about vendor capabilities to
satisfy FAA’s requirements. This research can help discover novel or innovative solutions,
eliminate excessively complex or unnecessary requirements, identify non-value added costs, and
improve vendor’s responsiveness to subsequent solicitations. Market research is performed in
the early stage of procurement planning and helps shape an appropriate procurement strategy.

(b) In many cases, market research is a shared responsibility between the program official
and Contracting Officer (CO). Market research may be for a one-time requirement, or as on-
going surveillance to understand the marketplace for products or services acquired repetitively.
It may also be conducted internally to FAA or externally. Examples of information gathered and
analyzed include:

       (1) Potential vendors and their capability to satisfy FAA’s requirements;

       (2) Number of vendors, business size status, and extent and nature of competition;

       (3) Cost information and trends;

       (4) Expertise, experience, and depth of vendor personnel;

       (5) Maturity, adaptability, and complexity of current technology;

       (6) Product or service acceptability;

       (7) Availability and delivery times of products or services;

       (8) Production processes, quality assurance practices, facilities, maintenance and
       logistics support capabilities;

       (9) Information about product design stability, planned design enhancements, and impact
       on fielded products;

       (10) Vendor capability to offer beneficial functional or performance trade-offs in their
       products or services;

       (11) Customer references and procurement histories of other organizations for same or
       similar products and services, including pricing and contract performance data;
       (12) Customary contract or license agreement terms and conditions;

       (13) Practices of vendors engaged in producing, distributing, and supporting items, such
       as terms for warranties, buyer financing, maintenance and packaging, and marking; and

       (14) Availability of suitable commercial or non-developmental items, or feasibility and
       cost of modifying commercial or non-developmental items to meet requirements.

(c) The extent and depth of market research and analysis is tailored to the individual
requirement, estimated dollar value, complexity, urgency, and past experience. Market research
may range from a telephone call or review of purchase histories to formal market surveys or
solicitations requesting information. Techniques for market research include:

       (1) Contacting knowledgeable individuals in Government and industry about market
       capabilities;

       (2) Reviewing the results of recent market research into similar or identical
       requirements;

       (3) Publishing formal requests for information in technical, scientific, business, or
       Government publications;

       (4) Querying on-line Government-wide databases of contracts and other procurement
       instruments intended for use by multiple agencies available at:
       www.contractdirectory.gov

       (5) Reviewing Government and commercial databases that provide relevant information;

       (6) Participating in interactive, on-line communication among industry, acquisition
       personnel, and customers to exchange information about current or planned vendor
       capabilities as it relates to FAA needs;

       (7) Obtaining source lists of similar items from other contracting activities or agencies,
       trade associations or other sources;

       (8) Reviewing catalogs and other generally available product literature published by
       manufacturers, distributors, and dealers or other related information available on-line;

       (9) Reviewing trade journals, directories, newspapers, and other professional
       publications;

       (10) Pre-solicitation conferences;

       (11) One-on-one meetings with vendors; and

       (12) Formal market surveys.
(d) Analysis of information gathered through market research is documented proportionately to
the value, complexity, and urgency of the acquisition.

(e) A “market survey” is used in two different contexts in AMS. In the procurement process, it
refers to any method used to survey industry to obtain information and comments, and to
determine competition, capabilities, and estimate costs. In the context of the lifecycle
management process, market surveys are part of Concept and Requirements Definition, and
Investment Analysis. During these lifecycle phases, market surveys provide information about
the range of alternatives and market capabilities, risk, and cost of potential solutions to mission
need.

(f) For procurements not under a program with an approved Implementation Strategy and
Planning Document, market analysis initiates industry involvement, develops and refines the
procurement strategy, obtains pricing information, determines whether commercial items exist,
determines the level of competition, identifies market practices, or obtains comments on
requirements.


B Clauses Added 10/2006

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C Forms Added 10/2006

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T3.2.1.3 - Implementing OMB Circular No. A-76 Revised 1/2009


A Guidance for Implementing for OMB Circular No. A-76

1 OMB Circular A-76, Performance of Commercial Activities

OMB Circular No. A-76, "Performance of Commercial Activities," states the policy of the
Government to: (a) rely generally on private commercial sources for supplies and services, if
certain criteria are met, while recognizing that some functions are inherently Governmental and
must be performed by Government personnel; and (b) consider relative cost in deciding between
Government and contractor performance. In comparing the costs of Government and contractor
performance, the Government bases contractor's cost of performance on firm offers.


2 Applicability of AMS

a. The FAA follows A-76 policy and procedures, except when the Circular is inconsistent with
AMS or other FAA statutory authority. The Circular requires compliance with the Federal
Acquisition Regulation (FAR), such as when conducting standard and streamlined competitions,
publicizing competitions, when establishing certain roles or responsibilities, and some decision-
making. References to FAR, FAR-based processes or terminology, or other Government
procurement requirements in the Circular are not applicable to FAA.

b. Procurement procedures, except as noted in this guidance, are based on AMS procurement
policy (section 3.0) and guidance (Procurement Toolbox). AMS is used to plan procurements;
solicit, evaluate and select sources; resolve protests and disputes; and manage contracts.

c. Except as described in this guidance, AMS-required decisions, mandatory planning
documents, and lifecycle phase-related activities described in AMS policy (sections 1.0 and 2.0)
are not applied to Circular A-76 competitions. AMS documentation, when applicable, is
appropriately tailored. Joint Resources Council decisions follow A-76 milestones rather than
AMS phases.


3 Responsibilities Revised 1/2009

a. Service Director of the organization responsible for conducting A-76 competitions:

Appoints an acquisition team to lead the competition. An acquisition team is a cross-functional,
empowered team given an operating budget and resources necessary to acquire specific services
identified as commercial in nature by a Federal Activities Inventory Reform (FAIR) Act
inventory.

b. Acquisition Team
       (1) Develops an Implementation Strategy and Planning (ISP) document, tailored
       as necessary.

       (2) Develops public announcements, evaluation criteria and plans, screening
       information requests, evaluation reports, and debriefs potential service providers.

c. Joint Resources Council (JRC):

       (1) Prior to issuance of the official start date (public announcement):

              (a) Baselines the cost of as-is performance;

              (b) Approves the acquisition strategy;

              (c) Revalidates the need for the function identified in the functional
              scoping study.

       (2) Prior to issuance of the final screening information request (SIR):

              (a) Establishes an activity cost baseline (independent government
              cost estimate);

              (b) Approves the ISP and Risk Management Plan;

              (c) Approves the Performance Work Statement (PWS) and Quality
              Assurance Surveillance Plan (QASP).

       (3) Prior to Source Selection decision:

              (a) Approves the final cost baseline;

              (b) Approves the recommended source selection decision.


4 Primary Phases for A-76 Competitions

The general process for the public-private competition within a competitive sourcing study falls
into four distinct phases: Preliminary Planning, Public Announcements, Competition Procedures,
and Post Competition Accountability.


5 Preliminary Planning

The general process for the public-private competition within a competitive sourcing study falls
into four distinct phases: Preliminary Planning, Public Announcements, Competition Procedures,
and Post Competition Accountability.
a. Functions. Before initiation of a competition, a FAIR Act inventory will have already
identified the function or activity as a commercial activity suitable for competition; the existing
service is deemed to satisfy needed capabilities.

       (1) A functional scoping study conducted during the preliminary planning phase
       of a public-private competition inventories functions that deliver "as is"
       services/capabilities. It also determines whether users have continued need for all,
       some, or none of those services. The functional scoping study incorporates
       mission need related activities and is used to document mission requirements.
       Therefore, a Mission Need Statement is not prepared.

       (2) From the functional scoping study, an initial set of technical and performance
       requirements is derived and documented in a functional scoping summary
       document (FSSD). The FSSD refines functions and subfunctions to describe
       minimum, required levels of technical performance. Functions are described in
       such a way as they can be measured and evaluated. The FSSD is developed before
       the public announcement and approved by the JRC.

b. Market Survey. A market survey is conducted to determine if sufficient interest and capability
exists in the marketplace to perform the service being competed. This market survey is in lieu of
AMS-prescribed investment analysis activities. A Requirements Document, Investment Analysis
Report, and Acquisition Program Baseline are not required.

c. Initial Acquisition Strategy. A high-level acquisition strategy is developed and approved by
the JRC.

d. As-is Cost Baseline.

       (1) A cost baseline is developed for the service as it is currently provided. This
       cost baseline is presented to the JRC for information before the public
       announcement.

       (2) Baseline costs for the competition are calculated in accordance with the
       guidance provided in Attachment C of OMB Circular A-76 (Revised).


6 Public Announcement (Official Start Date)

The public announcement starts the competition process. The announcement indicates that the
FAA will conduct the source selection in accordance with AMS. The FAA uses Contract
Opportunities (www.faaco.faa.gov) to make public announcements. Information posted on
Contract Opportunities is automatically copied to FedBizOps.


7 Competition Procedures Revised 1/2009
a. Stakeholder Involvement. A overarching goal is user and/or customer satisfaction along with
achievement of planned value and performance levels. This requires the acquisition team to work
with key stakeholders, including affected employees and associated collective bargaining units,
to ensure that all issues necessary for success are identified and resolved.

b. Notice of OMB Waivers. Any specific deviations from the Circular that require a waiver from
the OMB will be described in the SIR and public announcement.

c.AMS Planning Documents. The detailed strategy for the overall program is defined in an
Implementation Strategy and Planning (ISP) document. An ISP is:

       (1) Prepared to describe program actions and activities;

       (2) Developed prior to release of the final SIR; and

       (3) Approved by the JRC.

d. Availability of Data. Historical data and other information available to the ATO or the MEO
Team are made available by the Contracting Officer (CO) to all prospective providers. However,
information related to the performance or productivity of an incumbent MEO is not released.

e. Source Selection.

       (1) An ISP, appropriately tailored, describes the specific procurement approach to
       be used.

       (2) The Source Selection Authority (SSA) in the Circular is synonymous with the
       FAA’s Source Selection Official (SSO).

       (3) Use of AMS clauses "Notice of Cost Comparison" and "Right of First Refusal
       of Employment" is mandatory. The public announcement also states that award to
       a private potential service provider is contingent on results of the cost
       comparison.

       (4) Cost and pricing data is required from all potential service providers in
       accordance with the Circular. Common costs will be identified in the SIR.

       (5) The SIR includes a requirement for potential service providers to submit a
       quality control plan.

       (6) Special Considerations

               (a) Private sector offers and agency tenders are not evaluated
               separately. The CO, SSO, and evaluation team ensure that all
               potential service providers are treated fairly.
              (b) Deficiencies in an offer or tender are handled by the CO in
              accordance with the provisions of Attachment B of the Circular.

              (c) To the maximum extent possible, Government property is made
              available for use by service providers. The acceptance and use of
              such property, however, is not mandatory.

       (7) Within three days after contract award, the CO provides written notice to each
       potential service provider remaining in the competition, but not selected for
       award. This notice includes:

              (a) The number of potential service providers solicited;

              (b) The number of proposal received;

              (c) The name and address of each potential service provider
              receiving an award;

              (d) The items, quantities, and any stated unit prices of each award
              (The total contract price may be furnished if it is impractical at this
              time to provide unit prices but the unit prices must be made
              available upon request.);

              (e) In general terms, the reasons the potential service provider’s
              proposal was not accepted, unless the price information reveals the
              reason. In no event shall a potential service provider’s cost
              breakdown, profit, overhead rates, trade secrets, manufacturing
              process or techniques, or other confidential business information
              be disclosed to any other potential service provider.

f. Period of Performance.

       (1) Contracts awarded under the Circular are for a minimum of three years,
       excluding the phase-in period. OMB approval is required for performance periods
       exceeding five years, excluding the phase-in period. Performance periods for the
       agency tender and for private sector potential service providers will be identical.

       (2) Potential service providers, including the MEO, propose a phase-in plan to
       replace the incumbent service provider. The plan, intended to minimize disruption
       and start-up requirements, considers recruiting, hiring, training, security
       limitations, and other special considerations. The phase-in period is considered
       the first performance period of a new contract.

g. Contests. The FAA will follow the FAA Dispute Resolution process in total, which supercedes
the provisions of Section B, Part F, of the Circular. The Office of Dispute Resolution for
Acquisition (ODRA) is available to assist all parties of an A-76 acquisition, including the MEO,
when objections arise concerning the competition or source selection decision.

h. No Satisfactory Response. If no satisfactory offer or tender is received in response to an A-76
solicitation, the CO determines the reasons for non-responsiveness and proposes a course of
action to the Competitive Sourcing Official (CSO). The CSO then takes action in accordance
with the provisions of Attachment B to the Circular.

i. New Technology and Operational Processes. There is no required testing of existing services
when they become the responsibility of a new service provider unless new services or
technologies are introduced. The purpose of test and evaluation remains the mitigation of
potential operational risks and the verification of operational readiness for the In-Service
Decision. The Acquisition Team determines the type of testing, if required, prior to transition to
a new service provider. An In-Service Decision is not required to deliver a set of services using
existing technology or processes. The In-Service Decision is a key program milestone if new
technology or service concepts are introduced as a result of the competition or during the service
delivery timeframe.

j. Lessons Learned. The office responsible for conducting the acquisition maintains a data base
of lessons learned from each competition to ensure a consistent competition process and
development of best practices.

k. Competitive Sourcing Official (CSO). The CSO is responsible for the implementation of the
Circular within the FAA. Specific duties of the CSO are spelled out in the Circular.


8 Post Competition Accountability

a. In-Service Management begins when the new service provider initiates phase-in. At this point
an organization known as the Continuing Government Activity (CGA) assumes responsibility for
monitoring and assessing performance of the service provider. Members of the CGA are
appointed by the responsible service director. The manager of the acquisition team coordinates
closely with the manager of the CGA to assure a smooth transition of responsibilities.

b. For a performance decision favoring the agency, the CO establishes an MEO letter of
obligation with the official responsible for performance of the MEO. Appropriate portions of the
solicitation and the agency tender are incorporated into the letter of obligation which is then
distributed to appropriate individuals, including the ATO.

c. The CGA will accomplish the post competition accountability procedures required by the
Circular and will institute the appropriate monitoring mechanisms.


9 Adversely Affected Employees
a. In accordance with the FAA Performance Management System (PMS) Chapter 1, paragraph
14, Federal civilian employees serving competitive or excepted service appointments in Tenure
Groups I, II, or III, who are identified for release from their competitive level by the FAA as a
direct result of a performance decision resulting from a Circular competition are considered
adversely affected employees.

b. The new service provider must give such employees the right of first refusal for employment
openings under the contract in positions for which they are qualified, if that employment is
consistent with post-Government employment conflict of interest standards.

c. Within 10 days after contract award, the CO provides the new service provider a list of all
Government employees who have been or will be adversely affected or separated as a result of
the award. The new service provider then reports, within 120 days after contract performance
begins, the names of individuals identified on the list who were hired within 90 days after
contract performance began.


10 The Agency Tender

a. The Agency Tender is the FAA management plan submitted in response to a Circular
competition. It includes the MEO, a cost estimate, an MEO quality control plan, an MEO phase-
in plan and other elements required by the Circular and the SIR. It is not required to include a
labor strike plan, a small business strategy, a subcontracting plan goal, participation of small
disadvantaged businesses, licensing or other certifications, nor past performance information
(except in unique circumstances identified in the Circular). The date for delivery of offers and
tenders is the same.

b. When preparing the Agency Tender the MEO Team may consider the use of commercial
contractors or teammates to help achieve performance requirements. In such cases the MEO is
required to comply with the AMS.


B Clauses

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C Forms

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T3.2.1.4 - Chief Financial Officer Requirements Revised 1/2008


A Chief Financial Officer Approvals and Other Requirements Revised 1/2006

1 Authorization for Procurement Request Revised 10/2010

a. The Administrator, in a memorandum dated August 11, 2005, directed the Chief Financial
Officer (CFO) to exercise greater control and fiscal oversight over FAA contracting by
specifically giving the CFO approval authority over all proposed procurement actions of $10
million or more. This control and fiscal oversight were further clarified when the CFO, in the
Administrator-delegated role as FAA’s liaison to the DOT Office of Inspector General (OIG),
provided the official FAA response in a memorandum dated September 15, 2006 to OIG Report
Number Fl-2006-072, "Audit of Federal Aviation Administration’s RESULTS National
Contracting Service." To accomplish the greater control and fiscal oversight, FAA program
offices must submit these proposed procurement actions for CFO review to the Office of
Financial Controls early enough in the acquisition process so that CFO participation can be
effective. Review of potential commitments that have already been negotiated or otherwise
finalized to the extent that there is little left to do but execute the document does not provide the
CFO opportunity for effective contributions.

b. The CFO approval requirement applies to procurement actions for supplies, equipment,
materials, systems, services, construction, real property (e.g. utilities), or other items where the
total potential contract value or contract ceilings including options would be $10 million or
more.

c. CFO approval is required on all original actions of $10 million or more that would result in
one of the following:

       (1) New contract, including letter contract;

       (2) New agreement (interagency, intra-agency, not-to-exceed orders, other
       transaction, or cooperative agreement);

       (3) Basic ordering agreement (BOA)/blanket purchase agreement (BPA) where
       the potential value equals or exceeds $10 million as well as any individual orders
       on a BOA or BPA that equals or exceeds $10 million; and

       (4) Other procurement actions or any other binding commitment, such as a lease.

d. CFO approval is required on all modification actions (except as noted in paragraph e., below)
to existing contracts, orders, or agreements where the following applies:
       (1) Any individual modification or combination of modifications, to an existing
       contract of less than $10 million, which increases the total value or ceiling to $10
       million or more;

       (2) Any individual modification or combination of modifications previously not
       approved by the CFO to a contract with a ceiling or value of $10 million or more,
       that increases the base value (the total ceiling or value previously approved by the
       CFO) by the lesser of either 15 percent or $10 million.

       Note: The 15 percent is to be applied to a “base value” which is the value for the
       contract or other type of agreement that has been approved by the CFO. This
       value is set at two distinct events:

               (i) at the time of initial approval of the planned contract or other
               agreement; and

               (ii) when CFO approval of modifications is received, the base
               value is reset to include the value of the modifications, and for
               contracts awarded before October 1, 2005, the base value is the
               contract ceiling or value that includes modifications accrued
               through September 30, 2005.

       (3) Any modification to an existing contract of $10 million or more that results in
       a significant change to the statement of work. (The specific conditions involved
       with this approval will vary according to several factors, including the magnitude
       of the change to contract scope of work/requirements. The Office of Financial
       Controls is available for consultation with any program office to discuss questions
       concerning these conditions).

e. The CFO review and approval is not required for incremental funding actions under contracts,
orders, or agreements; or exercising of priced options which were included in the total estimated
contract value as part of a procurement action previously reviewed and approved by the CFO.
Also, modifications for incremental funding or exercise of priced options under contracts
awarded before October 1, 2005, do not need CFO approval as long as there is no change in
scope, contract ceiling, or contract value.

f. Procurement actions must not be split to avoid CFO approval of actions of $10 million or
more.

g. For procurements that meet the threshold for CFO review, market research and analysis is
required. It needs to be conducted in time to be documented in the package submitted the Office
of Financial Controls for CFO approval. The level of market analysis should be commensurate
with the size and complexity of the acquisition (see AMS Procurement Guidance T3.2.1.2)

h. The Contracting Officer (CO) must not release a request for offer (RFO) prior to receiving
CFO approval. This requirement applies to both competitive and non-competitive
procurements. (This paragraph relates to the timing of the CFO approval and does not override
the descriptions in paragraphs b. through g. of what requires CFO approval.)

i. CFO review and approval processes are as follows:

       (1) For all acquisitions subject to CFO review and approval other than support services
       acquisitions, the program official will get the CFO’s approval by submitting a "Request
       for Approval of Chief Financial Officer" form to the Office of Financial Controls. The
       "Request for Approval of Chief Financial Officer" template can be found under AMS
       Procurement Forms. The template includes a checklist of questions and requires
       submission of a business case, statement of work, and independent Government cost
       estimate (IGCE) for each proposed acquisition that meets the criteria for submission to
       the CFO.

       (2) Acquisitions for support services (also referred to as "support contracts") as defined
       under AMS Procurement Guidance T3.8.2A.4 that are subject to CFO review and
       approval must be reviewed by the Support Contract Review Board (SCRB) which will
       make a recommendation of approval or disapproval to the CFO. The purpose of the
       SCRB is to simplify and expedite CFO approval of support services procurements by
       adhering to a set processing timetable, while obtaining simulatneous approval from
       Contracting and Acquisition, Legal counsel, and the Office of Financial Controls. SCRB
       Phase I and Phase II templates may be found under AMS Procurement Forms.

j. The program official must provide a copy of the Office of Financial Controls’ approval note,
including all imposed conditions, and the CFO signature page to the CO.

k. CFO approval is specific to the business case, statement of work, and IGCE provided to the
Office of Financial Controls prior to approval. The criteria below provide guidance on proper
procedures to follow if there are significant changes to the business case, statement of work
and/or IGCE subsequent to CFO approval:

       (1) If, after CFO approval, the requirements do not change, but the revised cost
       estimate, negotiated amount, or selected offer is 15 percent or more than the
       IGCE estimate approved by the CFO, the revised estimate and an explanation for
       changes must be submitted to the Office of Financial Controls for an updated
       approval;

       (2) If, after CFO approval, the requirements do not change, but the revised cost
       estimate, negotiated amount, or selected offer is 15 percent or less than the IGCE
       estimate approved by the CFO, the program office must submit to the CFO an
       explanation of why the initial estimate was overstated, and provide the award
       amount to the Office of Financial Controls within 30 days of award;

       (3) If, after CFO approval, there are significant changes to CFO-approved
       contract statement of work, the program office must submit a revised statement of
       work to the Office of Financial Controls for an updated approval. (The specific
         conditions involved with this approval will vary according to several factors,
         including the magnitude of the change to contract scope of work/requirements.
         The Office of Financial Controls is available for consultation with any program
         office to discuss questions concerning these conditions).

l. After contract award, the Office of Financial Controls will request information regarding the
contract amount, compliance with any conditions/requirements in the CFO’s approval, and other
information which must be provided to CFO for follow-up action.


2 Capitalization of Assets Revised 7/2010

Capitalization allows FAA to accurately record the value of its assets and to generate reliable
information for financial statements required by the Chief Financial Officers Act. The CO and
requisitioning/program office personnel are to comply with capitalization requirements and
processes outlined in the Financial Manual, Volume 5 Capitalization, which is online at:
 https://employees.faa.gov/org/staffoffices/aba/financial_manual/vol_5/ (FAA only).


B Clauses Revised 10/2007

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C Forms Revised 1/2006

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T3.2.1.5 - Disaster or Emergency Preparedness and Response Revised 1/2009


A Disaster or Emergency Contracting Added 10/2006

1 Local Area Set-Asides for Disaster or Emergency Added 10/2006

(a) The Contracting Officer (CO) may set-aside procurements for competition among only
offerors residing or doing business primarily in an area where the President has declared a major
disaster or emergency. A major disaster may result in numerous Presidential declarations
spanning counties in several contiguous States. The CO, in consultation with the program
official, defines the specific geographic area for the local area set-aside. This set-aside area need
not include all the counties in the President-declared disaster or emergency area, but cannot go
outside it.

(b) The CO may use other methods to give preference to offerors residing or doing business
primarily in the area affected by a disaster or emergency to the extent practicable. For example,
the CO may use the local area preference as an evaluation factor for award.

(c) The CO may also combine a local area set-aside with a small business set-aside.

(d) A local area set-aside does not eliminate other AMS requirements for procurement, such as
competition considerations.


2 Continuity of Mission Critical Contracts Revised 1/2008

a. General.

       (1) Continuity of mission critical contracts during times of National Emergency or
       Incidents of National Significance, such as pandemic influenza, is required to ensure the
       integrity of the FAA and the National Airspace System (NAS). The program office must
       identify to the contracting office those contracts that are required to ensure continuity of
       critical supplies and services and at what level these supplies and services must be
       delivered. Critical contracts may include:

               (a) Support for communication infrastructure;

               (b) Supplies and services for crucial transportation support;

               (c) Supplies and services for facility security; and

               (d) Support for emergency response activities.
       (2) The Contracting Officer (CO) must include clauses ensuring that the tasks and
       deliverables from mission critical contracts are continued during times of National
       Emergency or Incidents of National Significance. This is to include a requirement for the
       submission of a Continuity of Contract Performance Plan to the CO by the contractor that
       addresses how the contractor will continue to provide supplies and services at the
       contracted level if a National Emergency or Incident of National Significance should
       occur.

       (3) The Continuity of Contract Performance Plan must be reviewed and accepted by the
       FAA Emergency Planning Staff.

       (4) If a contract is deemed non-critical by the program office, the CO must suspend or
       stop the contract during an emergency until it is determined conditions are favorable for
       non-critical contracts.

       (5) Management must identify COs and Contracting Officer's Technical Representatives
       (COTRs) on mission critical contracts that can assume the roles of CO and COTR, if the
       primary personnel are unavailable, in times of National Emergency or Incidents of
       National Significance.

b. National Emergencies or Incidents of National Significance include, but are not limited to:

       (1) Outbreak of pandemic influenza or infectious disease;

       (2) Terrorist attack;

       (3) Natural disaster.

c. The Continuity of Contract Performance Plan must address:

       (1) Plans and procedures;

       (2) Identification of essential functions;

       (3) Delegations of authority, planned order of succession, and cross-training to ensure
       personnel are available to provide services and make key decisions;

       (4) Proposed alternate operating facilities;

       (5) Interoperable and Effective Communications;

       (6) Critical records or data;

       (7) Protection of human capital;

       (8) Testing and training of the plan;
        (9) Devolution of control and direction; and

        (10) Reconstitution and resuming normal operations.

d. Further information regarding the FAA's reaction to a National Emergency or Incident of
National Significance and content of the Continuity of Contract Performance Plan can be found
in the National Response Plan and the National Strategy for Pandemic Influenza Implementation
Plan:

        National Response Plan: http://www.dhs.gov/files/programs/editorial_0566.shtm

        National Strategy for Pandemic Influenza Implementation Plan:
        http://www.whitehouse.gov/homeland/pandemic-influenza-implementation.html


B Clauses Added 10/2006

view contract clauses


C Forms Added 10/2006

view procurement forms


D Appendix Added 7/2007

1 Appendix 1- Emergency Procurement Guide Revised 10/2010

                             FAA Emergency Procurement Guide

This guide is for the use of FAA personnel when responding to a bona fide emergency, incident
of national significance, or aiding in disaster relief efforts. This guide supplements and
summarizes FAA Acquisition Management System (AMS); specific policy and guidance for
FAA procurement can be found at http://fast.faa.gov.

Emergency: A sudden, unforeseen event that requires action to correct or to protect lives or
property.

The flexibilities in this guide may be used:

1. In support of FAA contingency operations or restoration of the NAS;

2. To facilitate the defense against or recovery from nuclear, biological, chemical, or radiological
attack against the
United States; or

3. When the President declares an incident of national significance, emergency declaration, or a
major disaster declaration.

Unauthorized Commitments: DO NOT make commitments or promises of any kind to bind
the Government if you are not a properly warranted Contracting Officer (CO) or an authorized
holder of a purchase card and the requirement is within your warrant or delegation.

When purchasing goods or services in an emergency, COs and cardholders must ensure that
applicable FAA security standards are properly addressed and adhered to.

Purchase Cards

The purchase card is a valuable tool that can be utilized to procure requirements in times of
emergency. Despite the presence of an emergency situation:

Single and monthly limits established for the card account by the Chief of the Contracting Office
(COCO) in the cardholder’s Delegation of Purchasing Authority (DPA) must still be strictly
adhered to; and

The person making the purchase must be the cardholder on the card account and have a valid
DPA issued by the COCO.

Emergency Spending Limits

The maximum single purchase limit that can be assigned to purchase card is $100,000, while the
maximum billing cycle or monthly limit is $999,900. The COCO establishes both limitations
based on justification and recommendations of a cardholder’s approving official. If a cardholder
is designated or tasked to respond to emergencies or participate in relief efforts, that individual’s
single and monthly limit can be raised to a level that allows for an efficient and effective
emergency response.

A warranted CO can make purchases up to $100,000 using a purchase card (if within their
warrant limits); however the maximum Single Purchase Limit that may be issued to an un-
warranted cardholder is $10,000. If a non-warranted cardholder wishes to have a single purchase
limit above $10,000 (up to the $100,000 maximum) for emergency operations, the individual
must receive written approval from the COCO.

Prohibited Purchases

The following items cannot be purchased using a government purchase card:

Long-term rental or lease of land or buildings

Cash advances, including money orders
Telephone services controlled by the GSA or the local Office of Information Services or
Regional Communications Office

Cellular or communication devices and services covered by the National Wireless Program
Office (NWPO)

Gifts

Personal purchases or services

Travel-related expenses

Obtain Government owned or leased vehicles

Restricted Purchases

       Drinking water, except when:
           
           o    A duly constituted health authority pronounces the drinking water to be unsafe for
                human consumption at the site;
            o A viable and safe water source for FAA personnel is not available on or within a
                reasonable distance of the worksite;
            o FAA personnel reasonably foresee a disaster or emergency, such as the imminent
                landfall of a hurricane (See AMS Procurement Guidance 3.2.2.5 for additional
                restrictions); or
            o The drinking water is provided in a controlled environment to enable collections
                for drug use analysis for safety sensitive positions.
            o Food items for meetings and conventions, except as detailed in AMS Procurement
                Guidance 3.2.2.5.
       Membership fees for individual employees (the agency may purchase membership in a
        society or association in its own name)
       Subscriptions to publications or magazines not relating to official duties
       Clothing (or personal apparel of any description); requirements for special type clothing
        necessitated by agency requires written justification from the requestor’s supervisor and
        should be coordinated with legal counsel
       Rental of aircraft by persons not in aircraft related positions
       Fans, air conditioning and cooling equipment, space heaters and heating equipment,
        except as properly installed for general use in connection with the maintenance and
        operations requirements for the site.
       Water coolers, or vacuum cleaners and other household appliances (i.e. refrigerators,
        microwaves, etc), except as requisitioned for general use by the authorities charged with
        building maintenance and equipmentPlaques, trophies, etc. given to employees for high
        quality work or special projects (See AMS Procurement Guidance 3.2.2.5 for additional
        information) Services over $2,500
       Construction over $2,000
       Store gift cards or gift certificates (see AMS Guidance T3.2.2.5.A.4.d.(3)).
Purchase Card Flexibilities

See the Emergency Procurement Flexibilities section below in this guide.

Purchase Card Dos and Don’ts

      Be sure not to charge travel related expenses on the purchase card.
      Ensure that funding is available and approvals are received. Despite the presence of an
       emergency, funding must be available prior to purchase.
      Never allow anyone else to use your purchase card.
      Secure the card at all times and immediately report lost or stolen cards to the Agency
       Program Coordinator (APC) and bank.
      Ensure that vendors understand that FAA is exempt from sales tax.
      Never exceed assigned single or monthly purchase limits.
      Never split a purchase to avoid single or monthly purchase limits.

Credit Card Checks

      For those vendors that don’t accept a purchase card, credit card checks have a single
       purchase limit of $2,500.

Procurement Resources and Tools for Emergencies

Mailing Lists: Keeping a mailing list of vendors for a given locale for various supplies or
services may prove useful when emergency response limits time for market research. Some if
not all regional procurement offices have lists available, and can be easily formed.

Qualified Vendors List (QVL): A QVL is a mailing list where vendors submit their background
(to include experience, certifications, etc) to the FAA to qualify to be on the QVL. As
requirements become known, QVL vendors compete for award. A QVL can be useful where
lists are needed in specialized areas such as NAVAIDS, electrical, EPDM roofing, or EFIS
siding.

Blanket Purchase Agreement (BPA)

      If an area finds a recurring need for a supply or service during an emergency response,
       the procurement office can establish BPAs locally.
      Individuals can be identified by the CO as authorized users of the BPA and can place
       purchases or “calls” against it.
      A BPA can be established with zero funding, and when needs arise it can be funded per
       action or in “bulk.”
      BPAs can be established with either local or national vendors depending on the need.
      BPAs can be established with multiple vendors for the same need.

Indefinite Delivery/ Indefinite Quantity Contract (ID/IQ)
      If a need is known but the schedule and quantity are unknown, an ID/IQ contract can be a
       valuable tool.
      An ID/IQ contract can be established with a single or multiple vendors.
      An ID/IQ does have a guaranteed minimum quantity in the contract.
      Funds are obligated by each task or delivery order, not by the contract itself.

County, City, or Local Trade Organization

      As a response to an emergency can involve varying levels of government, many state,
       county, and city governments have already established listings of vendors in varying
       trades that can be utilized.
      In several areas, vendors have committed personnel and equipment to mobilize for
       emergency response when required.
      Several trade organizations have also formulated listings of their members that have
       committed their resources to emergency responses. These include heavy construction
       contractors (earth moving, etc), electricians, and landscape contractors (tree removal,
       etc.).
      Many government offices or trade organizations list these vendors in annual publications
       for reference when needed.

Other Federal Resources

GSA

      GSA Advantage Disaster Relief: GSA has established a website to identify those products
       and services that are traditionally utilized in relief efforts. As the products are available
       through GSA Advantage and GSA Federal Supply Schedule (FSS) contracts, products
       and pricing are easily obtained. http://www.gsa.gov/portal/content/102246
      GSA Advantage: While using the purchase card, required supplies can be purchased and
       received in a short period of time. A cardholder can locate required items using the
       search feature on the site, or utilize tailored sections of the site that categorize the
       products into areas such as Homeland Security Products or Wild Fire and Equipment.
       https://www.gsaadvantage.gov
      GSA e-Buy: If a requirement is needed quickly, yet time limitations allow for some
       market research, e-Buy allows for the distribution of an opportunity to FSS vendors and
       submission of the resulting vendor quote for the need electronically.
      GSA FSS or GSA BPA: There are several FSS contracts and Blanket Purchase
       Agreements (BPA) established by GSA or other agencies for various goods or services.
       GSA has the goods and services organized by type, and provide them in the GSA
       Schedule e-Library at http://www.gsaelibrary.gsa.gov/ElibMain/home.do

Department of Homeland Security (DHS) or Federal Emergency Management Agency
(FEMA): DHS has established several contracts and agreements for supplies and services to be
utilized during an emergency response. Information regarding the ability to utilize these tools or
to learn of avenues available can be obtained by calling DHS at (202) 205-5045.
FEMA Source Lists: FEMA has formulated several lists of vendors of varying trades that may
be utilized in relief efforts. The lists and contact information can be obtained by calling (202)
646-4686.

Defense Logistics Agency (DLA): DLA contracts for various supplies and services that can be
utilized by the FAA. These include contracts for heavy equipment and buildings. www.dla.mil

Air Force Contract Augmentation Program (AFCAP): This program provides various civil
engineer and service capabilities to include structural fire protection, environmental
management, and lodging. http://www.afcesa.af.mil/cex/cexx/cex_afcap.asp

Navy’s Construction Capability (CONCAP) contract: Provides rapid response capability in
emergency operations and is focused on construction and construction-related activities. Tasks
include airfield construction, pier construction, and petroleum storage.
http://www.globalsecurity.org/military/agency/navy/concap.htm

Army’s Logistics Civil Augmentation Program (LOGCAP): Provides rapid response in areas
to include construction support, general logistics services, and facility engineer support.
http://www.globalsecurity.org/military/agency/army/logcap.htm

Emergency Procurement Flexibilities

      Mandatory Sources: An emergency may exempt procurements from complying with the
       Javits-Wagner-O’Day (JWOD) Act, Randolph Sheppard Act, and the Federal Prison
       Industries requirements. (AMS Procurement Guidance T3.8.4)
      Single Source Procurement: In an emergency, procurements can be awarded to a single
       source if in the best interest of the FAA. (AMS Procurement Guidance T3.2.2.4)
      Public Announcement: The requirement to synopsize or publicly announce procurements
       over $100,000 is waived for emergency actions. (AMS Procurement Guidance T3.2.2)
      Walsh-Healey Public Contracts Act: Contracts for supplies under emergency conditions
       are waived from this act. (AMS Procurement Guidance T3.6.2)
      Purchase Card: See section Purchase Cards.
      Credit Card Checks: See section Purchase Cards.
      Letter contracts: If the situation demands immediate response, a CO may issue a letter
       contract to a vendor. A letter contract includes identification of the requirement and a
       brief description of the work, a total amount for which the contractor shall be limited to
       expend and the FAA shall be required to pay; and the period of performance by the
       contractor. (AMS Procurement Guidance T3.2.4)
      Verbal Authorization: A CO may give a vendor a verbal authorization to begin work once
       funds are committed and complete the remaining contract phases after the fact. (AMS
       Policy 3.2.2.4.1.1)
      Oral Solicitations and Quotations: Oral solicitations may be used when processing a
       written solicitation would delay the acquisition of supplies or services in an emergency to
       the detriment of the FAA. Oral quotations may be authorized to allow for quicker receipt
       of pricing for goods and services. Documentation for each oral Request for Quote (RFQ)
       should include:
       
       o    Description of requirement and RFQ number;
       o    Rationale for use of oral quotations;
       o    Sources solicited: Include date, time, and name of individuals contacted, and
            prices offered; and
        o Best value determination.
   Central Contractor Registration (CCR): Contractors do not have to be registered in CCR
    before award of a contract, agreement, or lease in response to an emergency or disaster.
    (AMS Procurement Guidance T3.3.1)
   Electronic Fund Transfer (EFT): Payment by EFT is not required during emergencies or
    contingency operations. (AMS Procurement Guidance T3.3.1)
   Local Area Set-Asides for Disaster or Emergency: The CO may set-aside procurements
    for competition among only offerors residing or doing business primarily in an area
    where the President has declared a major disaster or emergency. (AMS Procurement
    Guidance T3.2.1.5)
   Bonds: For emergency acquisitions, the CO may waive the requirement to obtain a
    guarantee when performance bond and/or payment bonds are usually required. (AMS
    Procurement Guidance T3.4.1)
   Legal Coordination: At Headquarters, the Assistant Chief Counsel for Procurement, and
    at Regions and Centers, the Region or Center Counsel, may make written exceptions to
    the Coordination Policy described in T1.15, adjust dollar minimums, or in appropriate
    cases, waive the Coordination Policy. (AMS Procurement Guidance T1.15)
   Overtime: Approval of contractor overtime should be prospective, but if justified by
    emergency circumstances, approval may be retroactive. (AMS Procurement Guidance
    T3.6.2)
T3.2.2 - Source Selection Revised 7/2009


A Source Selection

1 Source Selection Guide Revised 7/2010

A guide to source selection is in Appendix 1 to this section T3.2.2.


2 Public Announcement and Announcement of Competing Offerors Revised 7/2007

All procurements over $100,000 must be publicly announced on the Internet or through other
means. If the Internet is used, as a minimum the announcement should be placed on the
Contracting Opportunities page contained in the FAST. This requirement does not apply to
emergency actions, purchases from an established QVL or FSS, exercise of options, or changes.
For actions under $100,000, a public announcement is optional.

Publicizing the names of offerors competing for FAA contracts can be a method of encouraging
small businesses to seek subcontracting opportunities with potential FAA contractors. When
appropriate, the Contracting Officer (CO) may publicly announce names and addresses of
offerors responding to a screening information request. Also, the CO, after making a down select
decision, may announce names and addresses of offerors remaining in the competition leading to
award provided the SIR includes a notice to the offerors and no offeror objects to the release of
this information.


3 Past Performance Revised 7/2011

a. General. Past performance can be one indicator of a prospective contractor’s future
performance. To help ensure that the best performing contractors are providing products and
services to the FAA, past performance should be evaluated during source selection whenever
appropriate.

b. Instructions for Using Past Performance in a Screening Information Request (SIR).

        (1) General Considerations. Factors chosen for evaluation should be reasonable, logical,
        coherent, and directly related to requirements in the statement of work (SOW). The key
        to successful use of past performance in the screening process is a clear relationship
        between the SOW, instructions to offerors, and evaluation criteria. Past performance
        information that is not important to the current acquisition should not be included. For
        instance, there would be no point in considering poor subcontract management if there
        were no subcontract management needed on the contract. Alternatively, if there were a
        significant amount of software development, it would be important to know the offeror's
record with estimating lines of code, providing software builds on time with few errors,
and accomplishing the effort within the estimated cost.

(2) Responsibility Determination. When appropriate, the SIR should state past
performance will be used to evaluate the responsibility of the contractor and as an
evaluation factor. A contractor with a record of unsatisfactory past performance should
be screened out of the selection process as part of the responsibility determination. If a
contractor's past performance record passes the responsibility determination, then the past
record should be compared to the other responsible offerors to determine the offeror that
provides the best value to the Government.

(3) Past Performance as a Separate Non-Cost/Price Factor. It is best to include past
performance as a stand-alone factor, as opposed to integrating it with other non-cost/price
factors. Making it distinct and identifiable will reduce the chances of its impact being
lost within other factors and should make evaluation easier. The relative importance of
past performance compared to price or cost and any other evaluation factors is left to the
broad discretion of the procurement team (CO, legal counsel, program official and other
supporting staff) as is the source and type of past performance information to be included
in the evaluation.

(4) How to Weigh Past Performance. Past performance should be ranked to ensure it is
meaningfully considered. To be meaningful in the screening process (and to
ensure offerors are aware that actual contract performance will be a significant factor in
future awards), past performance may be at least equal in significance to any other non-
cost evaluation factor. If a numeric weighting system is used, past performance may be
rated at 25 percent or more. For example, if there were five non-cost evaluation factors
including past performance, then any of the following examples of weightings or relative
importance would suffice:

      Past performance at 25 percent with the other four factors rated at 18.75 percent
       each (75/4=18.75)
      Past performance at 25 percent, technical excellence at 25 percent, management at
       20 percent, the other two factors at 15 percent each
      All five factors rated at 20 percent
      Technical approach rated at 30 percent, past performance rated at 30 percent (to
       equal the highest rated other non-cost factor), management at 20 percent and the
       other two factors rated at 10 percent each
      Technical capability and past performance are considered equal in importance
       followed by test and evaluation, logistics management, and subcontract
       management in descending order of importance

(5) Non-Relevant Contract Experience/New Contractors. The SIR should state
whether new contractors, or contractors with non-relevant contract experience will be
considered, or rated negatively. For example, if the offeror has a performance history on
non-relevant contracts, i.e., prior Government or commercial performance record, but not
specifically on the type of work solicited, this information might be used to demonstrate
management potential. New contractors may have key management or technical or
scientific personnel proposed for the contract that have some relevant experience. An
evaluation of the performance of the proposed key personnel on relevant contracts can be
used, as appropriate, as part or all of the past performance evaluation. In addition,
teaming relationships and subcontractors can enhance the capability of potential offerors
to perform, depending on the relationships that exist within the teaming process.

(6) Time-frame, Size, Scope, Complexity. The SIR should ask the contractor for
references for ongoing or contracts completed within a specified period of time. A period
of three to five years is considered reasonable, depending on the particular
circumstances. For small dollar contracts where there are many actions and contractors
that provide the products or services, a shorter period may by appropriate. Offerors may
attempt to "cherry pick" references to provide selected information on past history. To
minimize this, the procurement team should attempt to gather past performance history
from sources other than those provided by the offeror. Such sources might include
the Past Performance Information Retrieval System (PPIRS) database for on-going
efforts, other agency contracting personnel, and listings of contract awards posted on the
FAA Contract Opportunities. All on-going or completed contracts performed during the
identified period, or the last "X" contracts performed by the entity within the identified
period should be sought. Instructions to offerors should ask only for a list of the previous
contracts and contact points and for a description of any quality awards earned by the
offeror. It is not necessary to burden the process by asking that the offeror prepare a
description of its past performance history in the proposal. The procurement team should
request references for contracts that are similar in size, scope and complexity to the
statement of work in the SIR. Each of these terms should be defined in the SIR to alert
the offeror to the type of data that is required.

(7) Discriminators/Sub-factors.

       (a) Attention should be paid to what discriminates a "good" performer
       from a "poor" performer for the type of work that will be performed on the
       specific acquisition. Past performance sub-factors should be shaped by
       those discriminators, be limited in number, and should be tailored to the
       key performance criteria in the SOW. For certain prime contracts, the
       ability to manage subcontracts, or software development capability may be
       important discriminators. The following are some other examples of sub-
       factors that may be used to evaluate past performance: quality, timeliness,
       cost control, business practices, customer satisfaction, key personnel,
       and/or quality awards and recognition.

       (b) The sub-factors in the SIR should reflect the questions to be used in
       interviewing references or reviewing any written evaluations provided by
       the references. For example, sub-factors with corresponding questions
       under business practices could include:
              Management Responsiveness - Is the offeror cooperative, business-
               like and concerned with the interests of the customer?
              Contract Change Proposals - What is the contractor's history on
               contract change proposals? This includes, changes that lower the
               overall cost or improve performance - timely and accurate
               proposals for equitable adjustments - changes that have been
               withdrawn or dismissed as invalid.

(8) Relative Importance. The SIR should state whether all sub-factors are relatively
equal, or whether certain sub-factors are more important than others. For example, on a
contract where most of the work is done for end users and it is difficult for the contract
administration team to observe the contractor's performance in a cost-effective manner,
significant weight might be placed on customer (end user) satisfaction ratings from the
references.

(9) Major Subcontractors. If major subcontractors are likely to perform critical aspects
of the contract, the procurement team should evaluate past performance of these
subcontractors to determine the overall likelihood of success of the prime contractor. The
SIR should state how such information will be evaluated.

(10) Affiliates, Divisions, etc. For large organizations with many divisions, consider the
past performance of the affiliate, division, etc., that will perform the actual work. In
making such decisions, the procurement team must consider the degree of control that a
parent organization will exert over the affiliate. If a parent organization has an excellent
or poor performance record and the affiliate is going to be closely controlled and
managed by the parent, then the procurement team should consider the parent
organization's performance record in making the performance evaluation.

(11) Number of References. It is important to ask for at least two references for each
contract (program/technical and contracts) to assure that all aspects of the offeror's
performance will be discussed. The name of the organization providing the report should
be released to the offeror; however, the names of individuals should generally not be
released without the individual’s consent.

(12) Use of Other Sources. The instruction to the offerors should include a statement
that the Government may use past performance information obtained from other than the
sources identified by the offeror, and that the information obtained may be used for both
the responsibility determination and the best value decision. For each non-Federal
reference, the SIR should include an authorization to release information.

(13) Inclusion of Survey Form. The survey form need not be included as an attachment
in the SIR. However, if the procurement team elects to release the questionnaire, the SIR
should note that the questions to be asked would not be limited to those on the
questionnaire.
       (14) Sample SIR Provisions. Appendix 2 to this Guidance contains examples of SIR
       provisions and an example client authorization letter. The example is not the only way to
       include past performance in the SIR. Each SIR must contain instructions and evaluation
       information that best reflects the individual acquisition.

c. Evaluating Past Performance.

       (1) Applicability. Past performance is one measurement of an offeror’s ability to
       perform.

       (2) Relation to SIR. Instances of performance, both good and poor, should be noted and
       related to the SIR requirements. If problems were identified on a prior contract, the role
       the sponsor may have played in that result should be taken into account. Evaluations
       should consider the number and severity of problems, the demonstrated effectiveness of
       corrective actions taken (not just planned or promised), and the overall work record.

       (3) Disclosure of Negative Information. If the procurement team receives negative
       information that will have a significant impact on the likelihood of award to an offeror,
       then the procurement team should disclose the information and provide an opportunity to
       respond. This is true even if the SIR states that award may be made on initial offers. The
       SIR should include the appropriate provisions notifying the offerors that FAA retains this
       option.

       (4) Current Versus Older Performance. The age of the performance being evaluated
       may be weighted so that performance on older contracts receives less weight than
       performance on more recent contracts. More weight may be given to those evaluations on
       prior FAA or Federal contracts as opposed to contracts with state/local governments or
       private parties or to prior contracts of a similar nature to the SIR.

       (5) Method of Scoring. The final past performance rating may be reflected by a color, a
       number, adjectival, or a combination of these methods, depending upon what system is
       being used overall to indicate the relative ranking of the offerors. A past performance
       rating is not a precise mechanical or scientific process and must include sound business
       judgment. Therefore, the documentation of the final rating should include a logical
       description of the underlying reasons for the conclusions reached.

       (6) Evaluating Disputed/Negative Information. When the procurement team receives
       negative information, or information that is disputed, they should carefully consider the
       offeror’s response and determine what weight to apply, based on the facts obtained from
       the questionnaire, interview, or other sources. The file must be documented to explain
       why the procurement team assigned a particular rating. This is especially important in
       situations involving unresolved disputes.

d.   Obtaining Information on an Offeror’s Past Performance.
(1) Applicability. There are various methods of obtaining information on a contractor’s
past performance.

(2) Reference Checks. The most commonly used method of obtaining past performance
is to conduct reference checks from a variety of sources, including previous FAA
program and contracting personnel, other Federal agencies, state and local governments,
and commercial contractors.

(3) Other Sources. Dun & Bradstreet can obtain information on past performance on
specific contractors for the FAA ( Dun & Bradstreet charges for this information). In lieu
of FAA paying for the report, the SIR may require offerors to provide a copy of a recent
past performance report prepared by Dun & Bradstreet. In this case, the offerors would
see the report and have an opportunity to resolve any disputed data before the report is
submitted to FAA. Using this process could save time and money, but should not be
relied on as the only source of data. Quality certifications and awards can also serve as a
useful source of past performance information.

(4) Timetable. The process of collecting information should begin as soon as the
proposal evaluation begins. Collecting information can be time consuming. Researchers
must locate and question sources of information, either in person, by telephone or in
writing. Obtaining this information as early as possible in the evaluation process gives
the procurement team invaluable information in determining the viability of the
individual offerors. If the information shows a history of poor performance, the
procurement team can eliminate the proposal from the competition as non-responsible. It
may be best to establish a team devoted entirely to this task during the screening,
especially if FAA anticipates receiving a large number of proposals.

(5) Questionnaire or Survey Form. The first step in obtaining information from sources
is to develop a questionnaire, or survey form, that reflects the evaluation rating system
that will be used to assess the offerors strengths and weaknesses for the contract being
considered. Questions should be worded so that interviewees understand precisely what
they are being asked to describe. To maintain accurate records and facilitate verification,
the questionnaire (survey) record form should include: Interviewer’s name, company
name, reference’s name (to be held in confidence), full mailing address and telephone
number, date and time of the call, and description of the contract effort discussed. An
example of a questionnaire is found in Appendix 2.4 Sample 3B.

(6) Information Collection. Once the questionnaire is prepared, the procurement team
should contact references. For all interviews, the questions should be stated to the
interviewees exactly as on the questionnaire. There are various ways to collect the
information: Face-to-face interviews, mailing the questionnaires, telephone interviews,
electronic mail (ensuring security measures are taken), or some combination of these.

(7) Number of References. At least two references should be contacted on each previous
contract effort. This should be specified in the instruction to offerors. Additional
references may often be identified during the interviews. It is also important to survey
reasonably large numbers of references in order to look for patterns in their description of
performance - individual ratings may be personal and biased. Numerous ratings can
show patterns and are therefore much more likely to be a valid indicator.

(8) Setting Up Interviews. Being well organized and efficient is important when
conducting the interview so as not to waste the interviewee's time. It is helpful to call the
reference to make an appointment to conduct an interview, rather than telephoning the
references unannounced, thereby catching them unprepared or with little time to respond.
 If possible, the questionnaire should be mailed or faxed to the reference in advance of
the appointment. Interviewers should take copious notes on the questionnaire to ensure
that all information is captured. Tape recording is a good means for capturing all of the
conversation, however, tape recording the conversation may cause the interviewee
discomfort and reduce the amount of information provided. If tape recording is used
during the interview, ensure the interviewee is aware of and agrees to the use of recording
devices.

(9) Conducting Interviews. Evaluators should look for patterns of either favorable or
unfavorable overall performance, rather than focusing on individual successes or
failures. It is important to look for actions that demonstrate high performance and not
just unfavorable performance. This will help to get away from the old responsibility
determination mode of just looking at performance problems. There appears to be a
tendency for references to give an upward bias to ratings. The interviewer should ask
enough questions to discriminate between "good" and "excellent." Evaluators should
request any existing documentation in support of excellent or negative findings (i.e.,
correspondence, modifications, determinations, etc.). Investigating negative findings in-
depth prior to presenting them to offerors, in discussions if held, will alleviate
unnecessary delays. Prior to concluding the interview, the evaluator should ask the
reference for a summary opinion, e.g., how would the interviewee rate the contractor's
overall performance and would the interviewee like to do business with the contractor
again?

(10) Concluding Telephone and Face-to-Face Interviews. Immediately following a
telephone or face-to-face interview, the interviewer should prepare a narrative summary
of the conversation (this can be the questionnaire as filled in by the interviewer) and send
it to the reference for verification, preferably by certified mail return-receipt requested,
fax, or electronic mail. The narrative should state explicitly that if the reference does not
object to its content within the time specified, it would be accepted as correct. If the
reference indicates that the narrative is incorrect, then a corrected narrative should be sent
for verification. If a reference will not agree to the record and satisfactory corrections
cannot be agreed upon, the record cannot be relied upon and should not be included in the
offeror's rating. Another source may provide the same information, however.

(11) Mailing Questionnaires. If mailing questionnaires is the chosen method for
collecting past performance information, mail the questionnaires to the references,
provide a time-frame for return of responses, and wait for the responses. If mailed
       questionnaires are not received in a timely manner, follow-up telephone interviews are
       suggested (following guidance above if telephone interview occurs).

e.   Past Performance Database.

       (1) Past Performance Information Retrieval System (PPIRS). The Past Performance
       Information Retrieval System (PPIRS) is the single, Government-wide repository for
       contractor performance information, and contains performance information on current
       and previous Federal contractors. The procurement team may use PPIRS
       evaluations to screen offerors and assess the probability of success based on an offeror’s
       past record as a contractor. Upon request, FAA may also supply past performance
       evaluation information to personnel of other Government agencies evaluating offerors
       who have performed on FAA contracts (see "Release of Information" subsection below).
       Headquarters Procurement Information and Services Team (AJA-A12) is FAA's liaison
       to PPIRS.

       (2) The procurement team is strongly encouraged to use PPIRS to record performance
       data on FAA contracts. Examples of FAA acquisitions for which PPIRS may be
       appropriate are the following (individually or in combination):

              (a) Technically complex,

              (b) High dollar value, and/or

              (c) More than one year in duration.

       PPIRS evaluations may also be done on Federal Supply Schedule Orders and orders
       placed under any other contract awarded by another Government agency. Excluded from
       PPIRS evaluations is any procurement awarded under the Javits-Wagner-O'Day Act
       (JWOD).

       (3) Evaluation System. The Department of Defense's (DoD) Contractor Performance
       Assessment Reporting System (CPARS) is the sole "feeder" system for transmitting
       evaluations to PPIRS. Because the CPARS is the "feeder" system for PPIRS, the
       evaluation processes indicated on the CPARS web site at
       http://www.cpars.csd.disa.mil must be used for all PPIRS evaluations. The three modules
       of CPARS are as follows:

              (a) Construction Contractor Appraisal Support System (CCASS) module -
              assesses performance on construction contracts:

              (b) Architect-Engineer Contract Administration Support System (ACASS)
              module - assesses performance on architect-engineer contracts; and

              (c) CPARS module - assesses performance for all other types of contracts.
       (4) Creation and Disposition of Records. FAA CPARS Focal Points are responsible for
       the registration of all newly awarded contracts for which CPARS will be used. For such
       contracts, PPIRS evaluations must be prepared in CPARS at the completion of contract
       performance and annually by the anniversary date of contract award, and, if appropriate,
       after a significant event on a contract or a change in program management or CO. An
       initial report is required if the period of performance is less than one year. The
       evaluation report process, various roles of the FAA and the contractor, and rating areas
       are detailed in Appendix 3 to this Guidance, AMS Clause 3.10.1-26 "Contractor
       Performance Assessment Reporting System, and under the CPARS web site. Copies of
       the evaluation, the contractor's response, and review comments, if any, must be marked
       and treated as "source selection information" and retained in the contract file. As use of
       the PPIRS becomes common throughout FAA, SIRs will need only ask offerors to
       provide, in the proposal, a list of past contracts they have performed that were similar to
       the potential contract. The need for a section in the proposal on the offeror's past
       performance may not be necessary. Evaluation files from PPIRS Government references
       will provide much, if not all, of the information necessary to evaluate the offeror on past
       performance. The need for procurement team to conduct extensive interviews with the
       contract administrators, or conduct other investigations to verify a offeror's past
       performance should be greatly reduced. Because the contractor will have been offered
       the opportunity to comment on the ratings as they were prepared, further comment in the
       proposal or during discussions, if held, will usually not be necessary.

       (5) In addition to automatic transmittal to PPIRS, the completed evaluations must also be
       filed in the contract file. The evaluations will be retained in the PPIRS for not more than
       three years after completion of contract performance. Evaluations for construction and
       architect-engineer contracts will be retained in the PPIRS not more than 6 years past the
       date of the evaluation.

       (6) When another agency asks for a reference, the responsible CO should provide all
       evaluations, extracted from PPIRS, for the period desired by the requesting organization.
       If the applicable contract is not in PPIRS, an evaluation should be done for the file as
       requested.

       (7) Effective Date. The effective date for this CPARS requirement is October 1, 2011.
       Prior to then, performance data may be entered into CPARS for new contracts if the CO
       determines that there is a basis for using CPARS, and Clause 3.10.1-26 is in the contract.
       CPARS may similarly be used on existing contracts if the contract is bilaterally modified
       to add Clause 3.10.1-26.

f. Release of Information. The FAA and other agencies should use contractor evaluations to
support future award decisions. Solicitations for requirements expected to result in an FAA past
performance evaluation should require the contractor to identify the FAA resultant contract on
any Government contract solicitation that requests past performance information, that is issued
during performance or up to three years after performance, and is for similar items/services. The
completed evaluation must be released to other FAA evaluators, other Government personnel
authorized to receive such reports, and the contractor whose performance is being evaluated
only. Improper disclosure of such information could harm both the commercial interest of FAA
and the competitive position of the contractor being evaluated, as well as impede the efficiency
of FAA operations.


4 Cancelling a Screening Information Request Revised 10/2010

The CO, with the concurrence of the procurement team, may cancel a SIR at any time during the
solicitation process. The notification of cancellation may be made through the same mechanism
as the initial or subsequent SIRs. The CO must document cancellation for the contract file.


5 Section 508 of Rehabilitation Act Revised 7/2007

a. Requirements for Accessibility.

Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d) requires that persons with
disabilities that are either Federal employees or members of the public seeking information or
services from a Federal department are to have the access to and use of information and data
comparable to the access and use of the information and data by Federal employees or members
of the public who do not have disabilities. Section 508 applies to contract awards, task orders,
delivery orders, orders under Government-wide Schedules and Interagency Agreements for
electronic and information technology (EIT), as defined below. The procurement team (CO,
program official, legal counsel, and other supporting staff) will insert Section 508 requirements
into SIRs that include development, procurement, maintenance, or use of electronic and
information technology unless an exception applies (see Exceptions to Section 508 below).

b. Definition.

Electronic and information technology (EIT) means any equipment or interconnected system or
subsystem of equipment used in automatic acquisition, storage, manipulation, management,
movement, control, display, switching, interchange, transmission, or reception of data or
information. For purposes of the preceding sentence, equipment is used by the FAA:

        (1) If the equipment is used directly by FAA; or

        (2) Is used by a contractor under a contract with FAA that:

                 (a) Requires use of such equipment; or

                 (b) Requires use, to a significant extent, of such equipment
                 in performance of a service or furnishing of a product.

c. EIT Products. EIT includes, but is not limited to:

        (1) Computers and other office equipment;
       (2) Software and firmware;

       (3) Services (including support services);

       (4) Telecommunication products;

       (5) Information kiosks;

       (6) Office equipment such as copiers and fax machines; and

       (7) Websites.

d. Exceptions to Section 508.

       (1) Section 508 does not apply to EIT:

              (a) Acquired by a contractor incidental to a FAA contract;

              (b) For a national security system;

              (c) Located in space frequented only by service personnel for
              maintenance, repair, or occasional monitoring of equipment;

              (d) That would impose an undue burden on FAA (see paragraph g.
              below); or

              (e) That would impose a fundamental alteration in the nature of an
              EIT product or its components.

       (2) EIT is not available:

              (a) When procuring commercial items, FAA must comply with
              those EIT standards that can met with supplies or services that are
              available in the commercial marketplace in time to meet FAA's
              delivery requirements.

              (b) When EIT is not available, the contract file must be
              documented as outlined below.

       (3) Documentation supporting a Section 508 exception must be maintained in the
       contract file. The FAA Section 508 Procurement Checklist found in below in C.
       "Forms" can aid in regulatory compliance. Required documentation includes (if
       applicable):

              (a) Applicable technical provisions of the Access Board's
              standards;
                (b) Market research performed to locate items that meet the
                applicable technical provisions;

                (c) The specific provisions that cannot be met;

                (d) Undue burden documentation (see paragraph g. below); and

                (e) Other applicable documentation.

        (4) If an exception applies preventing FAA from meeting all of the applicable
        technical provisions, FAA may acquire EIT that meets some of those provisions.

e. Applicability.

        (1) All EIT procured on or after June 21, 2001 must comply with Section 508
        standards.

        (2) The FAA does not have to retrofit EIT procured before June 21, 2001.

f. Approval of Undue Burden.

When applying the requirements of Section 508 (see paragraph b. "Requirements for
Accessibility" above) would impose an undue burden, FAA must provide individuals with
disabilities covered by Section 508 the information and data involved by an alternative means of
access that allows the individual to use the information and data. Undue burden is defined as a
significant difficulty or expense to the FAA.

        (1) Documentation of an undue burden must include:

                (a) A thorough and fully supported explanation as to why and to
                what extent compliance with each provision of 36 CFR Part 1194
                would create an undue burden for the EIT being procured; and

                (b) Dollar value, market research performed, and alternative means
                of access that would be provided for individuals with disabilities to
                use the information or data. Alternative means of access include
                (but not limited to):

                       (i) Voice, fax, or relay service;

                       (ii) Qualified sign language interpreters;

                       (iii) Teletypewriters (TTY);

                       (iv) Internet posting;
                       (v) Captioning;

                       (vi) Text-to-speech synthesis;

                       (vii) Readers;

                       (viii) Personal Assistants; or

                       (ix) Audio description.

       (2) Final approval authority of an undue burden determination resides with the
       FAA Administrator. The Secretary of the Department of Transportation (DOT)
       formed the Undue Burden Advisory Board (UBAB), which will advise FAA on
       undue burden matters. The process for undue burden determinations is:

                (a) Review by DOT Chief Information Officer;

                (b) Review by DOT General Counsel;

                (c) Review by UBAB and their submission of a recommendation to the
                FAA Administrator in the form of an "Undue Burden Report"; and

                (d) Consideration of the report by the FAA Administrator or delegate.
                The resulting decision is final.

g. Sources of Further Information.

(1) U.S. Architectural and Transportation Barriers Compliance Board (U.S. Access Board):
http://www.access-board.gov

(2) Government-wide Section 508 website:
http://www.section508.gov

(3) FAA Section 508 website:
https://intranet.faa.gov/faaemployees/org/staffoffices/aio/programs/ites/section_508/ (FAA only)


6 Spare Parts

a. Shipping Spare Parts. For all shipments of spare parts, the contractor should include a packing
list that includes at least the noun name, part number, Commercial and Government Entity
(CAGE) Code, quantity, unit price, and national stock number (if available). Contracts that
require shipment of spare parts should include Clause 3.2.2.3-73 to establish this contractual
requirement.

b. Spare Parts for Nationally Furnished Project Materiel.
     (1) Requirements. The contracting officer should include coverage for spare parts in the
     screening information request and subsequent contract that facilitates availability,
     accessibility and tracking of spare parts.

     (2) SIR Provision. For contracts that will require the purchase and delivery of spare parts,
     the contracting officer should establish a discrete contract line item number for initial site
     and depot-level spare parts list contract line item number (CLIN) and corresponding
     delivery date. The CO should also include the SIR provision 3.2.2.3-74, "Submission of
     Initial Site and Depot-level Spare Parts List" as part of the instruction to vendors on the
     preparation of their SIR submissions to assure that the parts list will be furnished as part of
     the SIR submission.

     (3) Contract Requirements. The contracting officer should include a separately priced CLIN
     for the site and depot-level spare parts list and corresponding delivery due date of this
     contract deliverable. The list will contain each item's noun name, part number, Commercial
     and Government Entity (CAGE) Code, unit price, national stock number (if available) and
     the quantity.


7 Source Selection Team Responsibilities Revised 7/2007

The responsibilities described below are guidelines to help ensure successful source evaluation
and selection. The source selection team managing the procurement must apportion these
responsibilities to fit the specific procurement.

a. Source Selection Official. The service or product team lead or Director (or equivalent
position) of the requiring organization is the source selection official (SSO) for procurement
under an investment program subject to the Joint Resources Council (JRC) process (unless the
JRC otherwise designates an SSO). For procurements not subject to the JRC investment-decision
process, the CO is the SSO. The SSO's responsibilities include:

       (1) Assure team competence, cohesiveness, and effectivenes;

       (2) Assign responsibility to a source evaluation team member to mark all source selective
       sensitive information with the designation "SOURCE SELECTION SENSITIVE
       INFORMATION."

       (3) Approve evaluation plans and assure the evaluation conforms to the stated evaluation
       criteria; and

       (4) Make down-select decisions and assume full authority to select the source for award.

b. Source Evaluation Team. The source evaluation team properly and efficiently performs source
evaluation, and supports the source selection decision and related activities. Their responsibilities
include:
       (1) Draft all SIRs;

       (2) Formulate the source evaluation plan;

       (3) Review existing lessons learned reports that provide meaningful insight into the
       procurement;

       (4) Ensure an in-depth review and evaluation of each submitted screening document
       against FAA requirements and stated evaluation criteria;

       (5) Prepare the evaluation report (including recommendations, if applicable), using sound
       business judgment, to assist the SSO make down selection and/or award decisions;

       (6) Oversee all procedural and administrative aspects of the procurement;

       (7) Select advisors to assist the team in its evaluation, if required;

       (8) Prepare documentation for the SSO’s decision rationale, if requested by the SSO;

       (9) Participate in all debriefings; and

       (10) Prepare a lessons learned memorandum after completing the source selection.

c. Contracting Officer. The CO's responsibilities include:

       (1) Serve as the SSO for procurements not subject to the JRC investment-decision
       process;

       (2) Ensure, when applicable, conflict of interest documentation is obtained from all
       source selection team members; with legal counsel, determine if any conflicts or apparent
       conflicts of interests exist; and if so, resolve them;

       (3) Ensure source selection team members are briefed on sensitivities of the source
       selection process, prohibition against unauthorized disclosure of information (including
       their responsibility to safeguard proposals and any documentation related to the source
       selection team proceedings), and requirements concerning conflicts of interest; ensure
       source selection team members provide nondisclosure of information statements;

       (4) Coordinate communications with industry and conducts all debriefings;

       (5) Control all written documentation issued to industry;

       (6) Participate during screening, selection, and debriefing phases of source selection to
       ensure fair treatment of all offerors;
       (7) Issue letters, public announcements, SIRs, SIR amendments, and other procurement
       documents;

       (8) Ensure the contract is signed by a contractor's representative with the authority to
       bind the contractor; with legal counsel, ensure all contractual documents comply with
       applicable laws, regulations, and policies;

       (9) Execute, administer, and terminate contracts and make related determinations and
       decisions that are contractually binding.

d. Product or Service Team Lead or Director of the Requiring Organization. The product or
service team lead or Director's (or equivalent position) responsibilities include:

       (1) Serve as SSO if the procurement is subject to the JRC investment-decision process
       (unless otherwise designated by the JRC);

       (2) Assure FAA’s program needs are acquired through the appropriate source selection
       process;

       (3) Assure SIRs include adequate definition of requirements; and

       (4) Assure qualified technical evaluators, if required, assist the source evaluation team in
       the evaluation.

e. Advisors. The source evaluation team may appoint advisors to provide specialized expertise
and guidance not otherwise available on the team.

f. Nongovernmental Evaluators and Advisors. The source evaluation team may use
nongovernmental personnel as evaluators or advisors. Nongovernment personnel must comply
with FAA's conflict of interest and nondisclosure of information policies. The SIR must include
notice of any nongovernmental participation.


8 Supplier Process Capability Evaluation and Appraisal Revised 10/2010

a. General. This guidance is designed to assist the Source Selection Official (SSO) in
considering process capability of potential suppliers during proposal evaluations, mitigating
process-related risk of the supplier during contract/agreement performance, and for fostering
process improvement of the supplier throughout the lifecycle.

b. Scope/Applicability. Supplier Process Capability Evaluation and Appraisal are intended for
use in new acquisitions and agreements, but may also be incorporated into existing contracts or
agreements.

c. Expected Benefits.
       (1) Acquirer. The FAA can expect reduced risk in supplier selection and in meeting
       program objectives by motivating suppliers to improve their processes without forcing
       compliance to specific practices. Other benefits would include enhanced quality,
       predictability, performance and cost effectiveness of products and services acquired.

       (2) Supplier. Suppliers can expect reduced risk in meeting contract requirements by
       identifying and addressing process deficiencies that might negatively impact project
       success. Other benefits would include improved performance by identifying and
       addressing process deficiencies in critical process areas and potential for earning
       additional award fee where such incentives are part of the contract.

d. Pre-award. In the early phase of planning a source selection, the SSO determines whether
process capability will be considered as a risk factor for source selection. The following criteria
should be considered when making this decision:

       (1) The performance of specific processes is considered critical to accomplishment of the
       mission.

       (2) The product or service being acquired is considered crucial to the FAA.

       (3) A major component of the product or service to be provided is considered to be
       unprecedented.

       (4) The total estimated value of a contract for research, engineering, and development
       (R,E&D) is equal to or greater than $70 million, or a contract for acquisition is equal to
       or greater than $300 million.

       (5) There is lack of information on offeror’s past performance or process capability data,
       or the past performance or process capability of the offeror is weak.

       (6) The product or service is especially complex.

If process capability will be used as an evaluation factor, or as an adjustment to risk at either the
area or factor level, the SIR must include request for information on current status and
commitment to process improvement, including evidence indicating process capability. The SIR
must also identify particular aspects of the suppliers’ performance capabilities that are
considered critical to success of the contract, such as architecture and design, safety, security,
human factors, integration, risk management, or quality assurance.

Process capability appraisals can be used after award to validate and confirm the offeror’s
proposals and/or to identify risks associated with process deficiencies to be addressed during
contract performance. If a decision is made to perform a post-award appraisal, the SIR must
indicate that a post-award appraisal will be performed on the selected supplier’s processes that
are identified as critical or potentially risky.
e. Post-award. Post-award appraisals may be conducted on existing contracts with well-
established project(s), or on new contracts using target projects selected from the supplier’s
sponsoring organization.

f. Contract/Agreement Requirements. Considerations in developing contract/agreement
requirements include use of trade-off analysis to establish the level of surveillance of strong or
weak areas. For example, if a supplier is strong in an area, it is inefficient to check on that area
in the same way that would be applied in an area found to be weak. Additional Award fees may
also be used as an incentive. Contract/Agreement performance requirements include completion
of initiatives to remove critical deficiencies identified. Completion may be a factor in award
fees. Depending on the decision of the SSO, contract requirements may include:

        (1) Risk mitigation plans to remove deficiencies noted during pre-award.

        (2) Performing scoped post-award and follow-up appraisal(s).

        (3) Risk mitigation plans to remove deficiencies noted in post-award appraisal.

        (4) Government “surveillance” for specific areas (weaknesses) to be addressed.

        (5) An adequate reporting or insight mechanism to facilitate monitoring the risk
        mitigation plan.

        (6) Consideration for creating additional process strengths.

        (7) Improvement in performing process improvement activities.

Risk mitigation planning describes in detail the schedule and actions that will be taken to remove
deficiencies noted during the evaluation and selection process and those uncovered in the
appraisal process, if a post award appraisal is performed.


9 Tiered Evaluation Added 10/2007

a. General.

        (1) Tiered evaluation of offers is a process by which FAA promotes small business
        participation while providing FAA a means to continue the procurement if small business
        participation is insufficient.

        (2) The Contracting Officer (CO) may use tiered evaluation of offers to promote
        competition in each tier of small business concerns while still allowing other than small
        business to participate without issuing another SIR.

        (3) The CO must consider the tiers of small business concerns prior to evaluating offers
        from other than small business concerns.
b. Utilizing Tiered Evaluations.

        (1) The CO must specify in the SIR that a tiered evaluation of offers will be used in
        source selection, and offers from other than small business concerns will only be
        considered after the determination that an insufficient number of offers from responsible
        small business concerns were received.

        (2) The CO will specify the tiered order of precedence for evaluating offers in the SIR,
        and determine the applicable tiers based upon market research of the availability of small
        business concerns. An example of a tiered order of precedence is (descending in order):

                 (a) Socially and economically disadvantaged business (SEDB) expressly certified
                 by the Small Business Administration (SBA) for participation in SBA's 8(a)
                 program.

                 (b) Service-disabled veteran owned small business (SDVOSB);

                 (c) Very small business;

                 (d) Small business; and

                 (e) Other than small business.

(3) Once offers are received, the CO will evaluate a single tier of offers according to the order of
precedence specified in the SIR. If no award can be made at the first tier, the evaluation will
proceed to the next lower tier until award can be made.


B Clauses

view contract clauses


C Forms

view procurement forms


1 Section 508 Checklist Added 7/2007
Standards
Check the Access Board's standards that apply to the EIT purchase:
         1194.21 Software Applications and Operating Systems
          1194.22 Web-based Information or applications
          1194.23 Telecommunication Products
          1194.24 Video and Multimedia Products
          1194.25 Self-Contained Products
          1194.26 Desktop and Portable Computers
          1194.31 Functional Performance Criteria
          1194.41 Information, Documentation and Support
          Request vendor Section 508 compliance template (e.g. vendor's website or other website location)
Research
After market research, the product is considered:
         Compliant
          Partially compliant
          Noncompliant
          EIT is not available
Exceptions
         EIT acquired by a contractor incidental to a FAA contract
          EIT for a national security system
          EIT located in spaces frequented only by service personnel for maintenance, repair, or occasional
          monitoring of equipment
          EIT that would impose an undue burden on the agency
          EIT that would impose a fundamental alteration in the nature of an EIT product or its components


D Appendix

1 Source Selection Guide Revised 10/2010

1.1 Introduction

a. Purpose. AMS Policy Section 3.2.2 outlines requirements for source selection. This guide
contains additional information about processes and techniques for conducting a competitive
source selection. The Contracting Officer (CO) should use business judgment to tailor source
selection based on factors such as complexity, dollar value, urgency, and resources available.

b. Procurement Integrity. The Procurement Integrity Act applies to personnel involved in source
selection. This Act and other similar statutes and regulations impose stringent requirements for
safeguarding source selection and contractor proposal information, and other integrity issues.
There are civil and criminal penalties for violating these requirements. All personnel involved in
the source selection process must maintain the integrity of the procurement, and
should understand the prohibitions and certification requirements of the Act and similar statutes
and regulations. Any questions or other issues regarding procurement integrity should be
directed to legal counsel assigned to the source selection.

c. Bias or Conflict of Interest. Personnel involved in the source selection must not have any bias
or conflict of interest that would impact the source selection. Financial interests in offerors or
employment discussions with offerors are examples of conflicts of interests that would preclude
an employee from participating in a source selection.

1.2 Getting Started
a. Procurement Planning. Procurement planning should start when FAA identifies a need for
supplies or services. Early and effective planning helps ensure needs are satisfied with the right
product or service and at the right time.

b. Market Research. Market research is the first step in procurement planning. It is the process
of collecting and analyzing information about capabilities, products, services, or practices within
the marketplace. Information from market research shapes a procurement strategy and other
aspects of a procurement, such as the statement of work, evaluation factors, contract type, and
the amount and type of information to be requested in a screening information request (SIR).
The extent and degree to which you should document the results of market research varies, based
on factors such as urgency, estimated dollar value, complexity, and past experience. In some
cases, one person can conduct market research but for more complex requirements, a team effort
may be appropriate. (See AMS Procurement Guidance T3.2.1.2, Market Research and Analysis,
for more information)

c. Source Evaluation Team (SET). Source evaluation should be a multi-disciplined, team
effort. As appropriate, the team should include representatives from functional areas such as
contracting, program/technical, legal, logistics, and user organizations. The size and
composition of the SET varies, depending on the nature of requirement. Whether the team is
large or small, it should be structured to ensure teamwork, unity of purpose, and appropriate
communication among the team members throughout the process. A key to selecting personnel
is identifying experience, education, and business and technical skills required for the
evaluation. Required skills and experience should be defined with enough flexibility to allow
substitution of training for experience.

d. Support Personnel. Once the primary evaluation team is identified, additional support
personnel may be desired or required. Examples of such personnel
include administrative support, librarian/document-control personnel, and information
technology support.

e. Key Members and Responsibilities.

       (1) Source Selection Official. The SSO:

              Ensures the selection process is conducted properly and according to
               applicable policies and laws
              Establishes the SET and ensures the team has the skills, expertise, and
               experience to perform the evaluation
              Ensures actual or apparent conflicts of interest are avoided
              Ensures premature or unauthorized disclosure of source selection
               information is avoided
              Approves the evaluation criteria and plan,and ensures the SIR is consistent
               with both
              Concurs with the CO’s decision to release the SIR (if the SSO is other
               than the CO)
              Makes down-select decisions
              Makes the final source selection decision for an award, and ensures the
               rationale is documented before contract award

       (2) Source Evaluation Team. The team:

              Drafts evaluation criteria and plan
              Drafts SIRs and ensures an in-depth review of each SIR
              Selects advisors to the team, as necessary
              Conducts a comprehensive review and evaluation of proposals against SIR
               requirements and the approved evaluation criteria
              Prepares the necessary items for discusions with offerors, if applicable
              Prepares and submits the evaluation reports to the SSO
              Briefs the SSO, as requested
              Responds to special instructions from the SSO
              Provides information for debriefings of unsuccessful offerors
              Prepares a lessons learned memorandum after completing the source
               selection

       (3) Contracting Officer. The CO:

              Serves as the SSO (unless otherwise designated)
              Acts as the business advisor to the SSO (if not the SSO)
              Coordinates and controls communications with vendors and issues written
               communication to vendors
              Participates during screening, selection, and debriefing phases of source
               selection to ensure fair treatment of all offerors
              Issues letters, public announcements, SIRs, SIR amendments and other
               procurement documents
              Chairs all required debriefings

f. Advisors. The CO serves as a business advisor to the SSO (if the CO is not
the SSO). Additionally, legal counsel, technical experts, or small business specialists may advise
the SSO. If non-Governmental advisors are part of the SET, the SIR must include notice about
their participation in the evaluation. Non-Government advisors must not have any organizational
conflict of interest.

g. Required Certificates. The SSO and each SET member (including support personnel and
advisors) must sign nondisclosure of information and conflict of interest certificates.

h. Administrative Considerations. Each procurement varies, but administrative needs may
include facilities for evaluators and discussions with offerors, securable storage space for source
selection materials, and other items such as computers, special software, phones, copiers, etc..

i. Handling Source Selection Information.
       (1) SET members must handle proposal and evaluation material in a manner consistent
       with “For Official Use Only” or, as appropriate, a higher security classification. The SET
       should establish sufficient safeguards to protect the material whether it is in their
       possession or it is being disseminated, reproduced, transmitted, or stored.
       Additionally, procedures should be established for proper disposal of the material when it
       is no longer required. (See AMS Procurement Guidance T3.13.1.A.7, Records Retention,
       and FAA Order 1350.15C Records Organization, Transfer and Destruction Standards).

       (2) The Procurement Integrity Act precludes individuals from knowingly disclosing
       source selection information and contractor bid or proposal information before award of a
       contract to which the information relates. However, the SSO may authorize release of
       source selection information to other authorized Government personnel who have signed
       a non-disclosure statement, provided the release would not jeopardize the integrity or
       successful completion of the procurement (when the release is after the SIR is issued, but
       before contract award).

j. Security Responsibilities. All SET members are responsible for the security of source selection
information. In complex source selections, it may be beneficial to designate members of the SET
to oversee and perform security control functions. Security procedures may also be needed
for the source selection physical facilities, such as a sign in and out log, identification to access
the area, visitor (e.g.,maintenance/service personnel) control, or key or card control access. A
security briefing for the SET may be used to emphasize that each member:

              Is responsible for security of the evaluation and proposal materials and other
               source selection and proprietary information related to the procurement
              Is knowledgeable of, and will adhere to, governing security procedures and
               regulations
              Will not discuss, communicate, or otherwise deal on matters related to the source
               selection with any individual not assigned by the SSO, and then only within
               appropriately secure areas
              Will challenge any apparent unauthorized person within the physical location of
               the evaluation

1.3 Evaluation Plan and Selection Methodology

a. Evaluation Plan. The evaluation plan outlines the people, schedule, process, criteria and
other information relevant to evaluating offeror responses to a SIR, and the basis for selecting an
offeror for award. It is approved before receiving responses to a SIR requesting screening or
qualification information. The evaluation plan is source selection sensitive information, so it
must not be disclosed it to anyone not authorized by the SSO to receive the information. The
size and detail of the evaluation plan is based on the complexity of the procurement, but at a
minimum it includes:

      Name of the SSO and SET members
      Evaluation factors, relative importance of factors, and standards for rating offerors
       against the factors (SIR section M)
      Basis for selection and award

b. Selection Methodology. Designing a procurement strategy includes an effective evaluation
methodology. Depending on the circumstances, it may be in FAA's best interest to either:

       (1) Award to other than the lowest-priced offeror. Under this method, both cost/price and
       non-cost/price factors are assessed based on the evaluation criteria, and the SSO
       selects the offeror proposing a combination of these factors representing the best value to
       FAA. The SSO considers non-cost strengths and weaknesses, risks, and cost/price for
       each offeror and applies business judgment to select the offeror representing the best
       value.

       (2) Award to the lowest-priced, technically acceptable offeror. This method may be the
       best value when FAA would not realize any value from a proposal exceeding minimum
       technical requirements. The SIR establishes certain standards that an offeror must meet
       to be considered technically acceptable. An offeror does not receive any additional credit
       for exceeding the established standards. The award is then made to the lowest-priced,
       technically acceptable offeror.

1.4 Screening Information Request (SIR)

a. Purpose. The FAA obtains information and offers from vendors through a SIR. The SIR
includes information necessary for offerors to understand what FAA is buying, what information
to provide, and how responses will be evaluated. The success of a procurement is directly linked
to the quality of the SIR. A well-written SIR:

      Facilitates a fair competition
      Limits criteria to discriminators that add value
      Clearly details information required from vendors
      Clearly identifies evaluation and award criteria
      Conveys a clear understanding of FAA’s requirements

b. The SIR Process. For a given procurement, FAA may make a selection decision after one
SIR, or may have a series of SIRs (with a screening decision after each one) to arrive at the
selection decision. This process depends on the types of products or services to be acquired and
the specific source selection approach. Generally, when multiple SIRs are contemplated, the
initial SIR should request general information, and subsequent SIRs should request successively
more specific information. Initial SIRs need not state firm requirements, thus allowing FAA to
convey its needs to offerors in the form of desired features, or other appropriate means.
However, firm requirements ultimately are established in all contracts.

c. SIR Contents. Each SIR should contain the following information:

      Paper Reduction Act number on the cover page
      A statement identifying the purpose of the SIR (request for information, request for offer,
       establishment of a QVL or screening)
      A definition of need
      A request for specific information (with specific page and time limitations, if applicable)
      A closing date stating when submittals must be received in order to be considered or
       evaluated
      Evaluation criteria (and relative importance, if applicable)
      A statement informing offerors how communications with them will be conducted during
       the screening
      An evaluation/procurement schedule (including revisions, as required)

d. Categories of SIRs.

       (1) Qualification Information. Qualification information, used to qualify vendors and
       establish qualified vendor lists (QVLs), should be requested when a resultant QVL will
       be used for multiple FAA procurements. Qualification information screens those
       vendors meeting FAA's stated minimum capabilities / requirements to provide a
       particular product or service. Once qualification information is requested, received, and
       evaluated according to the evaluation plan, a QVL is established for the given
       product/service and vendors meeting FAA's qualification requirements are listed on
       the QVL. (See AMS Procurement Guidance T3.2.2.3. for more information on QVLs.)

       (2) Screening Information. Screening information allows FAA to determine which
       offeror(s) are most likely to receive the award, and ultimately which offeror(s) will
       provide FAA with the best value. The screening information requested in the SIR should
       focus on information that directly relates to the key discriminators for the procurement.

       (3) Request for Offer. A request for offer is a request for an offeror to formally commit to
       provide the products or services required by FAA under stated terms and conditions. The
       response to the request for offer is a binding offer, which is intended to become a binding
       contract if signed by the CO. The request for offer may take the form of a SIR, a
       proposed contract, or a purchase order.

e. Changes in SIR Requirements. If FAA's requirements change after release of a SIR, then all
offerors competing at that stage should be advised of the change(s) and allowed to update their
submittals accordingly. However, the SSO may waive a requirement at any time after release of
a SIR, without notifying other offerors, if the SIR states offeror specific waiver requests will be
considered, and the waiver does not affect a significant requirement that changes the essential
character or conditions of the procurement.

f. Common Problems.

       (1) Inconsistency among the SIR and related documents. It is critical for the SIR and
       related documents to be aligned. It is particularly important for the evaluation plan and
       the SIR to be consistent.

       (2) Inconsistency Within the SIR. It is important to avoid inconsistencies between the
       description of FAA’s requirements, instructions on how to prepare a proposal, and
       information related to the evaluation factors. These inconsistencies may be caused by
       different groups of people developing the different SIR sections without proper
       coordination. Such inconsistencies can result in less advantageous offers, necessitate
       changes to the SIR, cause delays, lead to offerors losing confidence in the process, or
       result in litigation.

       (3) Requesting Too Much Information from Vendors. The instructions for preparing and
       submitting proposals should focus on requesting only information necessary for the
       evaluation. The SIR requirements, each evaluation factor and subfactor, and the SIR
       preparation instructions should be linked. Request only the essential information needed
       to evaluate SIRs against the evaluation factors and subfactors and do not ask for
       information that will not be evaluated. Instructions that require voluminous information
       can cause potential offerors to forego responding in favor of a less costly business
       opportunity. Excessively large proposals may increase the time and costs associated with
       the evaluation. Proposal page limitations are encouraged, but need to be clearly defined
       and tailored to the needs of the acquisition. Focus exclusively on discriminators; failure
       to do so compromises the ability to identify the best offeror.

       (4) Unnecessary Use of Design Requirements. The description of FAA’s requirements in
       the SIR can have a significant impact on a source selection using a tradeoff process. Use
       of detailed design requirements or overly prescriptive statements of work statement
       severely limits the offerors’ flexibility to propose their best solutions. Functional or
       performance-based requirements provide flexibility and should be used to the extent
       practicable. While it may be more difficult to develop evaluation criteria and conduct the
       evaluation process using this approach, the benefits warrant it. These benefits include
       increased competition, access to the best commercial technology, better technical
       solutions, and fewer situations for protests.

g. Ways to Improve the SIR. A multi-disciplined team should develop the SIR. The members
should be stakeholders in the procurement and should continuously coordinate with each other to
ensure consistency of the SIR with other documents such as the evaluation plan. Open
communications with vendors should also be used to improve the SIR and to also promote
understanding of FAA’s requirements. This can be accomplished through various forms of
communication, such as releasing draft statements of work or SIRs, advance procurement
planning briefings for vendors, one-on-one meetings, or conferences with potential offerors.

1.5 Communications with Offerors

a. Communications with potential offerors should take place throughout the source selection
process. During the screening, selection, and debriefing phases of source selection,
communications are coordinated through the CO. All SIRs should clearly inform offerors how
communications will be handled during the initial screening phase. The purpose of
communications is to ensure mutual understanding between FAA and offerors about all aspects
of the procurement, including the offerors' submittals/ proposals. Information disclosed as a
result of oral or written communication with an offeror may be considered in the evaluation of an
offeror's submittal(s). To ensure that offerors fully understand the intent of the SIR and FAA's
needs, FAA may hold a pre-submittal conference and/or one-on-one meetings with individual
offerors. One-on-one communications may continue throughout the process, as required, at the
discretion of the SET.

b. Communications with one offeror do not necessitate communications with other offerors,
because communications will be offeror-specific. Regardless of the varying level of
communications with individual offerors, the CO should ensure such communications do
not give any offeror an unfair competitive advantage. During these and future communications,
as applicable, FAA should encourage offerors to provide suggestions about all aspects of the
procurement. Communications may necessitate changes in FAA's requirements or SIR. Where
communications do not result in any changes in FAA's requirements, FAA is not required to
request or accept offeror revisions. The use of technical transfusion is always prohibited.
Technical leveling, and auctioning techniques are prohibited, except in the use of "commercial
competition techniques."

1.6 Evaluation Factors

a. Evaluation Factors and Subfactors.

       (1) Selecting the appropriate evaluation factors and subfactors is key to the
       source selection process. The factors and subfactors give offerors an insight into
       significant considerations FAA will use to select the best value offer. Structure
       the evaluation factors and subfactors and their relative importance to clearly
       reflect the needs of the acquisition. Evaluation factors and subfactors from the
       evaluation plan must be in Section M (or equivalent) of the SIR.

       (2) Factors and subfactors are definable and measurable in readily understood
       quantitative and/or qualitative terms. They also represent the key areas of
       importance and emphasis to be considered in the source selection decision.
       Factors and subfactors should be limited to the essential elements to distinguish
       among the information/offers; i.e., will be true discriminators.

       (3) Common evaluation factors are technical, cost/price, past performance, and
       small business participation. Other evaluation factors may be appropriate, and
       one or more levels of subfactors may be needed.

       (4) Steps involved in formulating evaluation factors and subfactors include:

              • Conduct market research as a starting point for developing
              criteria

              • Brainstorm critical factors and subfactors

              • Identify key discriminators
               • Define the discriminators as evaluation factors and subfactors and
               their relative order of importance

               • Assess feedback during SIR(s)

       (5) Evaluation Weights. Assign relative importance to each evaluation factor and
       subfactor. Tailor the relative importance to specific requirements. Use priority
       statements to express the relative importance of the evaluation factors and
       subfactors. Priority statements relate one evaluation factor (or subfactor) to each
       of the other evaluation factors (or subfactors). For example:

       “Technical is the most important factor and is more important than all of the
       remaining factors combined. Technical is significantly more important than past
       Performance. The past performance factor is more important than the cost factor
       and small business participation factor combined. The cost factor is more
       important than the small business participation factor."

b. Numerical and Adjectival Ratings. When using the tradeoff process, the evaluators assess the
non-cost portion(s) of the offer and associated performance and proposal risks using numerical
or adjectival ratings. The success of an evaluation is not so much dependent upon the type(s) of
ratings used, but rather on the consistency with which the evaluators use them. For this reason,
adjectival ratings must include definitions for each rating so that the evaluators have a common
understanding of how to apply them.

c. Result of Proposal Evaluation. At the end of an evaluation, the result is each factor and sub-
factor are evaluated, the merits and risks of a proposal are documented and numerical or
adjectival ratings, when appropriate, are assigned.

1.7 Evaluation

a. Conduct Training. Before receipt of proposals, each evaluator should become familiar with all
pertinent documents, e.g., SIR, evaluation plan, and rating scales, etc.. The SET should conduct
training that includes an overview of these documents and the source selection process, with
instructions on properly documenting each offeror’s strengths, weaknesses, and risks. Training
should also include ethics information and the protection of source selection information. This
training is especially crucial when evaluators have little or no source selection experience.

b. Documenting the Evaluation. The SET performs an in-depth, systematic evaluation of
offerors' proposals against evaluation factors and subfactors in the SIR(s). All evaluations must
be documented. While the specific evaluation processes and tasks vary, the basic objective is
to provide information about each offeror's strengths and weaknesses so the SSO can make an
informed and reasoned decision. It is imperative that there be an orderly method for identifying,
recording, and tracking strengths and weaknesses. Also, it is critical that evaluation findings be
supported with narrative statements. Ratings alone are not conclusive data on which to make a
source selection decision. All determinations relating to changes in requirements after release of
the SIR should also be documented in the evaluation report.
c. Assignment and Use of Offeror Code Names. Once proposals are received, the SET should
consider establishing a code name for each of the offerors. This would help protect the identities
of offerors submitting proposals, the proprietary information in their proposals, and the contents
of the evaluation reports and source selection documentation. The code names would be
assigned by the SET and then communicated to all evaluation personnel prior to the start of
proposal evaluation. All SET members, evaluation team members, and support personnel
involved in the evaluation and source selection must then use any assigned code names vice the
actual offeror names in all discussions and in all written documentation and communication
(including the SSO Briefing). The SSO would then not know the actual offeror names until after
contract award. Additional guidance related to the assignment of code names is as follows:

       (1) Code names should be based on a series of like items (e.g., states such as Missouri,
       Arkansas, and Nebraska for an acquisition with three offerors);

       (2) Care should be taken to avoid choosing a series of names where one may be perceived
       as more valuable than another (e.g., if using precious metals, Gold may be perceived as
       more valuable than Bronze, or if using colors, Red may be perceived more negatively
       than Green);

       (3) If there are more than three or four offerors, alphabetic characters should be used for
       ease of reference (e.g., Offeror A, Offeror B etc.); and

       (4) Code names would not be assigned in the following situations:

           Only one proposal received; or
           Where the names of all offerors competing are publicly known in accordance with
            AMS clause 3.2.2.3-72 "Announcing Competing Offerors" (July, 2004).

Note: Regardless of whether code names are used, SET members, evaluation team members, and
support personnel are responsible at all times for the proper treatment of source selection
sensitive information from the evaluations and/or proposals.

d. Past Performance Evaluations. The past performance evaluators assess the performance risk
associated with each proposal. The final assessment describes the degree of confidence in the
offeror’s likelihood of successful contract performance based on that offeror’s demonstrated
record of performance under similar contracts. (See AMS Procurement Guidance T3.2.2.A.3.c.
for guidance on evaluating past performance.)

e. Cost/Price Evaluations. For fixed priced contracts, the evaluation could be as simple as
assessing adequate price competition and determining prices are fair and reasonable. Fixed
priced contracts also should be evaluated for appropriateness (i.e., consider market prices,
appropriate risk and the possibility of a “buy-in”) for what is being offered. For cost-
reimbursement contracts, the offerors’ estimated costs should be analyzed for both realism and
reasonableness. The cost realism analysis enables evaluators to determine each offeror’s most
probable cost of performance. This precludes an award decision based on an overly optimistic
cost estimate. Additionally, whenever cost analysis is performed, profit or fee analysis is
conducted. (See AMS Procurement Guidance T3.2.3 for guidance on cost and price
methodology.)

1.8 Selection and Award

a. Decisions. After the evaluators complete their evaluation, the results of the evaluation are
presented to the SSO. The SSO may:

      Make a selection decision (see below);
      Make a screening decision by screening those offerors determined to be most likely to
       receive award, thus continuing the screening phase;
      Amend and re-open to initial offerors; or
      Cancel the procurement.

b. Presenting the Evaluation to the SSO. The SET prepares documentation of the evaluation to
present to the SSO. The SSO uses this documentation as an aid when making a decision based
on business judgment about which proposal represents the best value. At the request of the SSO,
the SET may present the evaluation results through one or more briefings.

c. Source Selection Decision. The SSO must document his/her rationale for selecting the
successful offeror. The source selection decision document should explain how the successful
proposal compared to other offerors’ proposals based on the evaluation factors and subfactors in
the SIR, and should discuss the judgment used in making any tradeoffs. If the SSO disagrees
with a findings of the SET, the SSO’s rationale is part of the decision document. When the SSO
determines the best value proposal is other than the lowest-priced proposal, the decision
document justifies paying a price premium regardless of the superiority of the proposal's non-
cost rating. The justification clearly states the benefits or advantages FAA will receive for the
added price and why it is in FAA's interest. This justification is required even when the SIR
indicates non-cost factors are more important than cost/price. The SSO should consult with legal
counsel to review of the source selection decision document to assure that the decision clearly
articulates the business judgment of the SSO.

d. Awarding the Contract. After the SSO signs the source selection decision document, the CO
executes and distributes the contract, subject to completing other requirements before award such
as Congressional notification.

1.9 Debriefing of Offerors/Lessons Learned

a. Overview. The CO notifies all offerors who participated in the competitive process that they
may request a debriefing within three working days from receipt of award notification. Because
each offeror puts considerable resources into preparing and submitting a proposal, fairness
dictates a prompt debriefing and an explanation of why a proposal was unsuccessful.

b. Purposes of a Debriefing. A debriefing:
      Explains the rationale for the offeror’s exclusion from the competition or non-selection
       for award
      Instills confidence in the offeror that it was treated fairly
      Assures the offeror that appropriately qualified personnel evaluated the proposal
       according to the SIR and applicable policies and laws
      Identifies strengths and weaknesses in the offeror’s proposal so the offeror can prepare
       better proposals in future FAA procurements
      Gives the offeror an opportunity to provide feedback about the SIR process,
       communications, and the source selection
      Reduces misunderstandings and reduces the risk of protests

A debriefing is not a:

      Page-by-page analysis of the offeror’s proposal
      Point-by-point comparison of the proposals of the debriefed offeror and other offerors
      Debate or defense of FAA's award decision or evaluation results

The debriefing must not reveal any information prohibited from disclosure or exempt from
release under the Freedom of Information Act.

c. Notification of Debriefing. The CO should inform the offeror of the scheduled debriefing date
by electronic means with return receipt to acknowledge receipt. If the offeror requests a later
debriefing date, the CO should require the offeror to acknowledge in writing that it was offered
an earlier date, but requested a later date instead. This procedure will protect FAA's interests if
the offeror subsequently files a protest.

d. Debriefing Methods and Location. The CO debriefs one unsuccessful offeror at a time. The
CO selects the method and location of the debriefing. Although face-to-face debriefings are
frequently used, a debriefing may be by telephone or other electronic means acceptable to the
offeror and FAA. It may be burdensome for an offeror to attend in person and the needs of the
offeror should be give due consideration. The CO may provide an advance copy of the
debriefing to the offeror and allow the offeror to provide written questions for FAA to review
before the debriefing.

e. Attendees. The CO selects FAA attendees, and chairs and controls the debriefing. The CO
should ask an offeror to identify all individuals by name and position who will attend the
debriefing. Normally, the CO should not restrict the number of personnel the debriefed offeror
may bring unless there are space limitations. It is important to ensure appropriate FAA
personnel attend for it to be a meaningful debriefing. The CO may rely on SET members to
address specialized areas of the offerors’ proposals. Legal counsel should participate in
preparation and review of the debriefing materials. If the offeror’s legal counsel will attend the
debriefing, FAA legal should also attend. If there are indicators a protest is likely, inform FAA's
legal counsel. However, the CO must not deny a debriefing because a protest is threatened or
has already been filed.
f. Preparing for a Debriefing. The extent of preparation varies with the complexity of the source
selection. Sometimes, preparing debriefing charts is sufficient. Other times, a written script and
dry run rehearsals may be beneficial. Because debriefings are time sensitive, preparation may
begin before proposal evaluation is complete. SET members may assist in preparing debriefing
materials. The CO should brief all FAA personnel who will attend the debriefing on their roles
during the debriefing.

g. Information Provided. In a post-award debriefing, the CO discloses:

       • The evaluation rating and significant strengths and weaknesses of the debriefed
       offeror’s proposal;
       • The debriefed offeror’s total evaluated price/cost and the awardee’s total
       evaluated price/cost;
       • A general summary of the rationale for the award decision.

h. Handling Questions. Ideally, the CO should get all questions in writing. As a general
rule, FAA personnel should not answer questions “on the fly.” The CO and other FAA
personnel should caucus to formulate a response before providing an answer. At the end of the
debriefing, the CO should advise the offeror that the debriefing is officially concluded. At the
discretion of the CO, questions submitted by the offeror after the date on which the debriefing
was conducted may be answered. However, in such cases, the CO must advise the offeror that
the information is not considered part of the official debriefing (thereby not impacting the protest
time period).

i. Lessons Learned Memorandum. The SET should prepare a lessons learned memorandum. A
lessons learned memorandum is a valuable tool to relay procurement experiences to other
FAA personnel. The memorandum should highlight issues/processes that had a significant
impact on the procurement and changes that could be made to ensure a more comprehensive
evaluation or more timely award.

1.10 Oral Presentations

a. Introduction. Oral presentations (sometimes referred to as oral proposals) provide offerors an
opportunity to verbally present information they would normally provide in writing. Oral
presentations may be beneficial in a variety of procurements, and are most useful when
requirements are clear, complete, and stated in performance or functional terms. Oral
presentations are ideal for gathering information about how qualified the offeror is to perform the
work, how well the offeror understands the work, and how the offeror will approach the work.
Oral presentations may be conducted in person or via video teleconference. However, a
videotaped presentation does not constitute an oral presentation because it is not a real-time
exchange of information.

b. Scope of the Oral Presentation. Before deciding if oral presentations are appropriate, the SET
must select the evaluation factors. Then the SET should decide whether the information needed
to evaluate these factors can be better presented orally, in writing, or through a combination of
both. Oral presentations can convey information in diverse areas such as responses to sample
tasks, understanding the requirements, experience, and relevancy of past performance. Offerors
should be required to submit briefing materials in advance of the presentations. This allows FAA
attendees to review the materials and prepare any questions. Oral statements cannot be
incorporated into the contract by reference, so any information to be made part of the contract
needs to be submitted in writing. At a minimum, the offeror must submit certifications,
representations, and a signed offer (including any exceptions to SIR terms and conditions) in
writing. The offeror must submit any other factual data, such as cost or pricing data or
subcontract commitments, as part of a written proposal also.

c. SIR Information. If oral presentations are appropriate, the SIR must notify offerors that FAA
will use oral presentations to evaluate and select an offeror for award. The proposal preparation
instructions must contain explicit instructions and guidance regarding the extent and nature of
the process to be used. Instructions should discourage elaborate presentations since it may
detract from the information being presented. At a minimum, include the following information
in the SIR:

      The types of information the offeror must address during the oral presentations and how
       it relates to the evaluation criteria
      The required format and content of the presentation charts and any supporting
       documentation
      Any restrictions on the number of charts or the number of bullets per chart and how FAA
       will handle material that does not comply with these restrictions
      The required submission date for the presentation charts and/or materials
      The approximate timeframe when the oral presentations will be conducted and how FAA
       will determine the order of the offerors’ presentations
      Whether any rescheduling will be permitted if an offeror requests a change after the
       schedule has been established
      The total amount of time each offeror will have to conduct their oral presentation
      Who must make the presentation and a requirement that the offeror provide a list of
       names and position titles of the presenters
      Whether the presentation will be video or audio taped
      The location of the presentation site and a description of the site and resources available
       to the offeror
      Any rules and/or prohibitions regarding equipment and media
      How FAA will treat documents or information referenced in the presentation material but
       never presented orally
      Any limitations on FAA-offeror interactions during and after the presentation
      Whether the presentation will constitute discussions
      Whether FAA will use the information in the oral presentation solely for source selection
       purposes or whether such information will become part of the contract (which will
       require a subsequent written submission of that information)
      Whether the offeror should include any cost (or price) data in the presentation

d. Timing and Sequencing. Because preparing and presenting an oral presentation involves time
and expense, offerors not likely to be candidates for award should not have to conduct oral
presentations. This can be an important consideration with small businesses. When this is a
concern, consider down selections to establish the likely candidates for award before oral
presentations. The SIR should clearly articulate the methodology for down selection. The CO
may draw lots to determine the sequence of the offerors’ presentations. The time between the
first and the last presentation should be as short as possible to minimize any advantage to the
offerors that present later.

e. Time Limits. Establish a total time limit for each offeror’s presentation. It is not advisable to
limit the time for individual topics or sections within the presentation; this detail is the
presenter’s responsibility. If planning a question and answer session, it should be excluded from
the allotted time and set a separate time limit for it. There is no ideal amount of time to be
allotted. Make this decision using business judgment based upon the complexity of the
procurement, experience, and lessons learned.

f. Facility. Usually, the presentations should be at a Government-controlled facility. This helps
guard against surprises and ensures a more level playing field. However, nothing precludes
conducting an oral presentation at an offeror's facility. This may be more efficient if site visits or
other demonstrations are part of the source selection. If using a Government-controlled facility,
it may be made available for inspection and, if warranted, a practice session. Allowing offerors
to get acquainted with the facility will help ensure that it does not detract from the presentation
content.

g. Recording the Presentations. Having an exact record of the presentation could prove useful
both during the evaluation process and in the event of a protest or litigation. The oral
presentations can be recorded can using a variety of media, e.g., videotapes, audio tapes, written
transcripts, or a copy of the offeror’s briefing slides or presentation notes. The SET is
responsible for determining the method and level of detail of the record. If using videotaping,
allow for the natural behavior of the presenters. If slides or view graphs are used, the camera
should view both the podium and screen at the same time. Place the microphones so that all
communications can be recorded clearly and at adequate volume. Every effort should be made to
avoid letting the recording become the focus of the presentation. The recording, which is
considered source selection information, will become part of the official record. Provide a copy
to the offeror and seal and securely store the master copy of the recording to ensure there are no
allegations of tampering in the event of a protest or court action.

h. FAA Attendance. The CO should chair every presentation. All FAA personnel involved in
evaluating the presentations should attend every presentation.

i. Presenters. The offeror’s key personnel who will perform or personally direct the work being
described should conduct their relevant portions of the presentations. Key personnel include
project managers, task leaders, and other in-house staff of the offeror’s or their prospective key
subcontractors’ organizations. This will avoid the oral presentation becoming the domain of a
professional presenter, which would increase costs, detract from the advantages of oral
presentations, and adversely affect small businesses.

j. Reviewing the Ground Rules. Prior to each presentation, the CO should review the ground
rules with the attendees. This includes discussing any restrictions on FAA-offeror information
exchanges, information disclosure rules, documentation requirements, and housekeeping items.
These ground rules should also be included in the SIR. If the evaluation includes a quiz, the CO
should discuss the related ground rules. For example, whether the offeror may caucus or contact
outside sources by phone before answering. The ground rules should avoid too much
control because it could inhibit the presentation. However, the CO should control all exchanges
during the presentation if discussions will not be conducted.

k. Evaluation of Presentations. Evaluations should be performed immediately after each
presentation. Using evaluation forms will help the evaluators collect their thoughts and
impressions. Evaluators must document the rationale for their evalution conclusions.


2 Past Performance Samples Revised 7/2007

2.1 Sample 1 - Past Performance Instructions

Instructions for Providing Past Performance Information

Offerors shall submit the following information as part of their proposal for both the offeror and
proposed major subcontractors: (The information may be submitted prior to the other parts of the
proposal, to assist the government in reducing the evaluation period).

A. A list of the last ____ contracts and subcontracts completed during the past three years and
all contracts and subcontracts currently in process. Contracts listed may include those entered
into by the federal government, agencies of state and local governments, and commercial
customers. Offerors that are newly formed entities without prior contracts should list contracts
and subcontracts as required above for all key personnel. Include the following information for
each contract and subcontract:

   1.   Name of contracting activity
   2.   Contract number
   3.   Contract type
   4.   Total contract value
   5.   Contract work
   6.   Contracting Officer and telephone
   7.   Program manager and telephone
   8.   Administrative Contracting Officer, if different from # 6, and telephone
   9.   List of major subcontractors

B. The offeror may provide information on problems encountered on the contracts and
subcontracts identified in A above and corrective actions taken to resolve those problems.
Offerors should provide general information on their performance on the identified contracts.
General performance information will be obtained from the references. (Use this paragraph if
written input from the offeror is desired in addition to the information obtained from the
references.)
C. The offeror may describe any quality awards or certifications that indicate the offeror
possesses a high-quality process for developing and producing the product or service required.
Such awards or certifications include, for example, the Malcolm Baldridge Quality Award, other
government quality awards, and private sector awards or certifications (e.g., the automobile
industry's QS 9000, Sematech's SSQA, or ANSI/EIA-599). Identify what segment of the
company (one division or the entire company) that received the award or certification. Describe
when the award or certification was bestowed. If the award or certification is over three years
old, present evidence that the qualifications still apply.

D. Each offeror will be evaluated on his/her performance under existing and prior contracts for
similar products or services. Performance information may be used for both responsibility
determinations and as an evaluation factor against which offerors' relative rankings will be
compared to assure best value to the government. The government will focus on information that
demonstrates quality of performance relative to the size and complexity of the procurement
under consideration. The Performance Information Form identified in the List of Attachments
section will be used to collect this information. References other than those identified by the
offeror may be contacted by the FAA with the information received used in the evaluation of the
offeror's past performance.

E. Offerors should send their listed private sector references a letter to the following effect
authorizing the reference to provide past performance information to the government.



          Sample Client Authorization Letter (Optional)

          Dear "Client":

          We are currently responding to the Federal Aviation Administration’s SIR
          No.__________________ for the procurement of ________________________.

          The FAA is placing increased emphasis in its procurements on past performance as an
          evaluation factor. The FAA is requiring that clients of entities responding to its SIRs
          be identified and their participation in the evaluation process be requested. In the event
          you are contacted for information on work we have performed, you are hereby
          authorized to respond to those inquiries.

          We have identified Mr./Ms.______ of your organization as the point of contact based
          on his/her knowledge concerning our work. Your cooperation is appreciated. Any
          questions may be directed to:________.

          Sincerely,


2.2 Sample 2 - Past Performance Evaluation Factors Revised 10/2010
Past performance will be evaluated as follows:

1. Past performance will receive 35 percent of the non-cost/price factors ratings. Sub-factors A,
B, C, D and E are of equal importance and will receive up to 25 percent of the non-cost/price
ratings with the other 10 percent allocated to sub-factor G, quality awards. The criteria for a
rating of excellent are described with each sub-factor.

      A. Quality of Product or Service - compliance with contract requirements - accuracy of
reports - technical excellence. Excellent = There were no quality problems.

       B. Timeliness of Performance - met interim milestones - reliable - responsive to technical
direction - completed on time, including wrap-up and contract administration - no liquidated
damages assessed. Excellent = There were no unexcused delays.

      C. Cost Control - within budget - current accurate and complete billings - relationship of
negotiated costs to actuals - cost efficiencies. Excellent = There were no cost issues.

      D. Business Practices - effective management - effective small/small disadvantaged
business subcontracting program - reasonable/cooperative behavior - flexible - effective
contractor recommended solutions - business-like concern for government's interests.
Excellent = Response to inquiries, technical/service/administrative issues was effective and
responsive.

      E. Customer Satisfaction - satisfaction of end users with the contractors service.
Excellent = 90 percent or more of end users surveyed rated the service as excellent or better.

       F. Where the offeror has demonstrated an exceptional performance level in any of the
above five sub-factors additional consideration can be given by the procurement team for that
factor. It is expected that this rating will be used in those rare circumstances when contractor
performance clearly exceed the performance levels described as "excellent."

      G. Receipt of widely recognized quality awards or certifications. Excellent = Malcolm
Baldridge Quality award, or equivalent award, covering the entity submitting the offer.

2. Assessment of the offeror's past performance will be one means of evaluating the credibility of
the offeror's proposal, and relative capability to meet performance requirements.

3. Information utilized will be obtained from the references listed in the proposal, other sources
known to the FAA, consumer protection organizations, and others who may have useful and
relevant information. Information will also be considered regarding any significant major
subcontractors, and key personnel.

4. Award may be made from the initial offers without discussions. However, if discussions are
held offerors should be given an opportunity to address negative reports of past performance, if
the offeror has not had a previous opportunity to review the rating. Recent contracts will be
examined to ensure that corrective measures have been implemented. Prompt corrective action in
isolated instances may not outweigh overall negative trends.

5. Lack of past performance history relating to this SIR (state how lack of past performance
history will affect the evaluation, e.g. neutral rating).


2.3 Sample 3A - Past Performance Evaluation Record
A separate record must be completed for all contracts awarded the competing organization within the past
five years. A performance evaluation document will be submitted to the COTR for completion and used to
evaluate your organization’s past performance.
           1. Contractor Identification        2. Contract No.:
a. Name:                                       3. Date of Award:
b. Address:                                    4. Type of       a. Negotiated     b. Sealed Bid
                                               Contract:
c. City:                                                        c. Fixed Price    d. Cost Reimbursement
d. State:            e. Zip                                       e. Other [Specify]
                     Code:
5. Description and location of Work: [Attach additional pages as necessary.]




                          6. Contracting Officer’s Technical Representative (COTR):
a. Name:                                                                   b.
                                                                           Telephone
                                                                           No.:
c. Address:                             d. City:                           e.           f. Zip
                                                                           State:       Code:
7. Contract                                    8. Complexity of        a. Difficult        b. Routine
Amount:                                        Work:
9. Status: a. Active      b. Complete                 10. Contract
                                                      Completion Date
                                                      [Include
                                                      extensions]:
11. Type and Extent of Subcontracting [attach additional pages as necessary]:




2.4 Sample 3B - Past Performance Questionnaire
                         SAMPLE 3B - PAST PERFORMANCE QUESTIONNAIRE
                                  I. CONTRACT IDENTIFICATION
      i. Name:                                         ___________________________________
     ii. Description                                   ___________________________________
     iii. Geographic distribution of services
          under this contract, i.e., local,
          nationwide, worldwide:                       ___________________________________
     iv. Number of locations serviced by this
          contract:
                                                       ___________________________________
                                              II. EVALUATION
   A. PERFORMANCE HISTORY:
1.    To what extend did the contractor      Considerably surpassed minimum requirements 4
      adhere to contract delivery schedules.
                                             Exceeded minimum requirements 3

                                                Met minimum requirements 2

                                                Less than minimum requirements 1
        Comment:



2.      To what extent did the contractor       Considerably surpassed minimum requirements 4
        submit required reports and
        documentation in a timely manner?       Exceeded minimum requirements 3

                                                Met minimum requirements 2

                                                Less than minimum requirements 1
        Comment:
3.   To what extent were the contractor’s Considerably surpassed minimum requirements 4
     reports and documentation accurate
     and complete?                        Exceeded minimum contractual requirements 3

                                          Met minimum requirements 2

                                          Less than minimum requirements 1
     Comment:



4.   To what extent was the contractor   Considerably successful 4
     able to solve contract performance
     problems without extensive guidance Generally successful 3
     from government counterparts?
                                          Little success 2

                                          No success 1
     Comment:



5.   To what extent did the contractor    Displayed considerable initiative 4
     display initiative in meeting
     requirements?                        Displayed some initiative 3

                                          Displayed little initiative 2

                                          Displayed no initiative 1
     Comment:



6.   Did the contractor commit adequate Provided abundant resources 4
     resources in timely fashion to the
     contract to meet the requirement and Provided sufficient resources 3
     to successfully solve problems?
                                          Provided minimal resources 2

                                          Provided insufficient resources 1
     Comment:



7.   To what extent did the contractor    Considerably surpassed minimum requirements 4
     submit change orders and other
     required proposals in a timely       Exceeded minimum requirements 3
     manner?
                                          Met minimum requirements 2

                                          Less than minimum 1
     Comment:
8.    To what extent did the contractor     Considerably surpassed minimum requirements 4
      respond positively and promptly to
      technical directions, contract change Exceeded minimum requirements 3
      orders, etc.?
                                             Met minimum requirements 2

                                             Less than minimum requirements 1
      Comment:



9.    To what extent was the contractor’s    Considerably surpassed minimum requirements 4
      maintenance and problem
      tracking/reporting documentation       Exceeded minimum requirements 3
      timely, accurate, and have
      appropriate content?
                                             Met minimum requirements 2

                                             Less than minimum requirements 1
      Comment:



10.   To what extent was the contractor      Extremely effective 4
      effective in interfacing with the
      Government’s staff?                    Generally effective 3

                                             Generally ineffective 2

                                             Extremely ineffective 1
      Comment:



B.    TERMINATION HISTORY
11.   Has this contract been partially or  Yes [ Default Convenience ] No
      completely terminated for default or
      convenience?                         If yes, explain (e.g., inability to meet cost, performance, or delivery
                                           schedules).
      Comment:



12.   Are there any pending terminations? Yes No

                                             If yes, explain and indicate the status.
      Comment:



C.    EXPERIENCE HISTORY
13.   How effective has the contractor       Extremely effective 4
      been in identifying user
      requirements?
                                          Generally effective 3

                                          Generally ineffective 2

                                          Extremely ineffective 1
      Comment:



14.   What level of integration experience Considerable surpass minimum experience 4
      has the contractor demonstrated in
      the reconfiguration of government    Exceeded minimum requirements 3
      owned software, commercial
      software, and government furnished
                                           Met minimum contractual requirements 2
      hardware?
                                          Less than minimum requirements 1
      Comment:



15.   To what extent was the maintenance Considerably surpassed minimum requirements 4
      and problem reporting/ tracking
      documentation produced by the            Exceeded minimum requirements 3
      contractor’s efforts satisfactory to the
      users?
                                               Met minimum contractual requirements 2

                                          Less than minimum requirements 1
      Comment:



16.   To what extent did the contractor      Considerably surpassed minimum requirements 4
      coordinate, integrate, and provide for
      effective subcontractor management? Exceeded minimum requirements 3

                                          Met minimum requirements 2

                                          Less than minimum requirements 1
      Comment:



17.   To what extent did the contractor    Considerably surpassed minimum requirements 4
      provide timely technical assistance,
      both on-site and off-site, when      Exceeded minimum requirements 3
      responding to problems encountered
      in the field?
                                           Met minimum requirements 2

                                          Less than minimum requirements 1
      Comment:
18.   To what extent did the contractor      Considerably surpassed minimum requirements 4
      achieve effective logistics support,
      i.e., replacement parts, personnel,    Exceeded minimum requirements 3
      etc.?
                                             Met minimum requirements 2

                                             Less than minimum requirements 1
      Comment:



19.   To what extent did the contractor      Considerably surpassed minimum requirements 4
      provide quality replacement parts?
                                             Exceeded minimum requirements 3

                                             Met minimum requirements 2

                                             Less than minimum requirements 1
      Comment:



20.   To what extent did the contractor     Considerably surpassed minimum requirements 4
      meet the repair/response times in the
      contract?                             Exceeded minimum requirements 3

                                             Met minimum requirements 2

                                             Less than minimum requirements 1
      Comment:



21.   Did this contract include a Help       Yes No
      Desk?
      If yes, to what extent was the         Considerably surpassed minimum requirements 4
      contractor responsive to users
      contacting the Help Desk for           Exceeded minimum requirements 3
      assistance?
                                             Met minimum requirements 2

                                             Less than minimum requirements 1
      Comment:



22.   If there was a Help Desk, were users Always able on the first attempt 4
      able to make contact with the Help
      Desk personnel on their first attempt? More often than not on the first attempt 3

                                             Rarely able on the first attempt 2

                                             Never on the first attempt 1
      Comment:



23.   Were the Help Desk personnel         Always courteous and responsive 4
      courteous and responsive?
                                           Usually courteous and responsive 3

                                           Rarely courteous and responsive 2

                                           Never courteous and responsive 1
      Comment:



24.   Were user questions resolved in a    Always resolved in a timely manner 4
      timely manner?
                                           Usually resolved in a timely manner 3

                                           Rarely resolved in a timely manner 2

                                           Never resolved in a timely manner 1
      Comment:



25.   How technically qualified were the   Extremely qualified 4
      Help Desk personnel?
                                           Satisfactorily qualified 3

                                           Minimally qualified 2

                                           Technically deficient 1
      Comment:



26.   How satisfied are you with the       Extremely satisfied 4
      contractor’s Help Desk problem
      escalation procedures?               Satisfactorily satisfied 3

                                           Minimally satisfied 2

                                           Unsatisfied 1
      Comment:



27.   How technically qualified were the   Extremely qualified 4
      maintenance personnel?
                                           Satisfactorily qualified 3

                                           Minimally qualified 2
                                              Technically deficient 1
        Comment:



D.      COST MANAGEMENT
28.     To what extent did the contractor     Less than estimated cost 4
        meet the proposed cost estimates?
                                              Comparatively equal to estimate 3

                                              Exceeded the costs 2

                                              Considerably surpassed estimate 1
        Comment:



E.      NARRATIVE SUMMARY                     Use this section to explain additional information not included
                                              above.
        Comment:




2.5 Sample 3C - Business Management Past Performance Summary
                                            Part A. Contract Summary
1. Contractor                                         2. Contract Number:
Name:
Street:                                               3. Contract Type:
City:                                                 4. Competitive:       yes               no
State:                    Zip                         5. Follow-on:         yes               no
                          Code:
Telephone:                                            6. Period of
                                                      Performance:
7. Contract Cost Data                          Estimated Cost                     Fee              Total Value
                                               Firm Fixed Price
                        Initial Contract Cost      $                      $                      $
                       Current Contract Cost       $                      $                      $
8. Product Description and/or Services Provided.




                      Part B. Performance Evaluation of Contract (Summary)
     Performance Elements        Excellent     Good          Fair         Poor                       Unsatisfactory
9. Quality of Work
10. Timely Performance
11. Effectiveness of Management
12. Compliance with Labor
Standards
13. Compliance with Safety
Standards
14. Handling Staff Integrity
Issues
15. Facility Maintenance &
Repair
16. Personnel Management
Practices
17. Overall Evaluation
18. Remarks on excellent performance. Provide data supporting this observation. [Continue on separate
sheet(s) if needed.]




19. Remarks on unsatisfactory performance. Provide data supporting the observation. [Continue on separate
sheet(s) if needed.]




                                      Part C. Identification of Evaluator
20. Name:                                  21. Organization:
22. Title:                                  23.   Date:

NOTE: If verbal telephonic         24. Information obtained by:        25. Signature
response
     received, complete the
     following:

2.6 Sample 4 Survey Form
Please provide concise comments regarding your overall assessment of the contractor’s performance on the
contract identified. Because of the nature of the contract to be awarded, please focus on system integration and
installation aspects, when possible, rather than development or production. Please respond to each question in a
narrative format. Please telefax your response to the attention of the following point of contact. Please call the
individual cited before faxing your response.
                                                    Responses are needed by
                                 Section 1. Identification of Point of Contact
           Program Name
           Name                                                                           Telephone Number
           Address                                                                   Voice
                                                                                      FAX
                                      Section 2. Performance Verification
Fact Finding Questionnaire for
NOTE: We have reviewed the latest Contractor’s           (dated)
Performance Annual Review (CPAR) on file
If you can provide any further information, please respond to the questionnaire. If there are no further updates,
no further information will be required. (Use this paragraph when looking for additional information on
CPARs.)
                                             Contract Information
Contractor/Division:
Program Name:
Contract Type                                                 Contract Number:
Period of Contract                                                    to:
                                           Respondent Identification
Name                                                   Position
Telephone No. (Voice)                                    Telephone No. (FAX)
Business Address                                         City, ST
                                                         Zip Code
Relation to Program:
Give a brief, general description of what the contractor was required to deliver. (If the work included
installation/integration of (WIDGET) systems, please identify locations and types of systems.) Please note that
if a negative reply is supplied, a clarification request is submitted to the contractor, and they in turn have the
right to be made aware of the comment.




                                             Evaluation Criteria
1. Contractor Management
    1.a. Discuss responsiveness of the contractor’s upper level management to your organization’s concerns
    and needs.




    1.b. Describe how well the contractor’s management interfaced with your staff and organization.




    1.c. Discuss how well the contractor’s management system provided visibility into progress/problems/risks
    in the technical, cost, and schedule areas, and how well the risks were minimized.
    1.d. Discuss how well the contractor managed its subcontractors. (If there was a subcontractor, please
    include how the contractor maintained oversight of the sub.)




    1.e. If your contract involved the issuing of delivery orders, please discuss any problems the contractor had
    in responding to them (e.g., excessive workload due to conflicts with other contracts).




2. Technical
    2.a. Did the contractor exhibit and exercise a sound engineering approach to the contract?




    2.b. Did the contractor personnel have adequate experience to perform the tasks required? (Please include
    specifics as to personnel to perform design, system integration, test, and equipment installations.)




    2.c. Discuss how well the contractor met the specification requirements for the system, hardware, and
    software.




    2.d. Discuss the contractor’s ability to achieve the required reliability and maintainability without undue
    schedule delay or cost overrun.




    2.e. How well was the contractor able to achieve a final design which was producible and supportable?




    2.f. How well did the contractor respond when any technical problems were encountered (e.g., in areas of
    timelines and technical adequacy?




    2.g. If the contractor was required to perform work outside the Continental United States (CONUS), please
    indicate locations and types of work done; also please discuss how familiar the contractor was with
    CONUS work (e.g., work permits, local taxes, host nation agreements, etc.).
    2.h. When encountering problems in the field, was the contractor able to provide timely technical
    assistance both on-site and off?




3. Logistics and Supportability
    3.a. Discuss any major problems incurred by the contractor in achieving effective logistics support.




    3.b. Was Contractor Logistics Support (CLS) part of the contract? If so, was CLS timely and effective?




    3.c. Discuss whether the support equipment and manuals were adequate.




    3.d. Did any product failures occur while under warranty? If so, please indicate how responsive the
    contractor was to correct the deficiency.




4. Quality Assurance
    4.a. Discuss the contractor’s quality assurance plan and its effectiveness.




    4.b. Discuss the contractor’s quality control during system design, integration, test, and installation. (Please
    include discussion on amount of scrap, repair, and rework activities.)




5. Schedule
     5.a. Did the contractor deliver on time? Discuss any schedule overruns and how the contractor minimized
     them.




    5.b. If there were schedule changes, please explain what percentage was attributed to government changes
    (or your organization’s changes) or other factors.




6. Cost
    6.a. Contract Dollar Amounts
    Original                                                                 For Award Fee Contracts
    Current                                                                 Percentage of Award Fee Paid
    Estimate of Final


    6.b. Were there cost overruns? If yes, how much was attributable to the contractor?




    6.c. Reasons for cost variances.




7. Overall
    7.a. Based upon your answers to 1-6, how well did the contractor perform? (Mark with an "X".)
                                Exceptional            Satisfactory           Marginal        Unsatisfactory
    Management
    Technical
    Log & Support
    Quality Assurance
    Schedule
    Cost
    7.b. Please provide any additional comments which you believe are important in the evaluation of the
    contractor’s performance.




    7.c. If you had the change to do this again, would you use this contractor again?




Thank you for your efforts and timely response.
   (Your Name)                                          Chairperson
    (Program Name)


3 FAA CPARS Guide Added 7/2011

        FAA Use of Contractor Performance Assessment Reporting System (CPARS)

1.0 Introduction

This Guide assigns responsibilities and provides procedures for systematically assessing
contractor performance in accordance with AMS Procurement Guidance T3.2.2A.3.

1.1 Background
The Contractor Performance Assessment Reporting System (CPARS) is a paperless contracting
initiative housed and maintained by the DoD. Since the National Institutes of Health (NIH)
discontinued use of its Contractor Performance System (CPS), CPARS has been mandated for
use across all Federal Government agencies as the “feeder” system for entering contract
performance data into the Government-wide Past Performance Information Retrieval System
(PPIRS). Use of the CPARS for is strongly encouraged as it ensures that FAA contract
performance evaluations will be entered into the PPIRS database to enhance the centralized data
repository of contractor performance information. All CPARS evaluations must be initiated and
completed electronically within the system. This Guide refers only to the CPARS module under
which performance evaluations for most CPARS evaluations will be done. Any performance
evaluations for architect-engineer or construction contracts will be done under the separate
ACASS and CCASS modules respectively. Information on all modules is available at:
 http://www.cpars.csd.disa.mil.

1.2 Purpose

The primary purpose of the CPARS is to ensure that current and accurate data on contractor
performance is available for use in source selections. The completed past performance
assessments are available through the PPIRS. In addition to the sources of information outlined
in AMS Procurement Guidance T3.2.2A.3, the Contracting Officer may use information
available through PPIRS to support responsibility determinations of prospective contractors.
Senior FAA and contractor officials may also use the information derived from the CPARS for
other management purposes consistent with AMS Guidance.

CPAR assesses a contractor’s performance, both positively and negatively as appropriate,
providing a record on a given contract during a specified period of time. Each assessment must
be based on objective data (or measurable, subjective data when objective data is not available)
supportable by program and contract management data (see Section 1.4). CPARS performance
expectations must be addressed in the Government and contractor’s initial post-award meeting.

1.3. Responsibility for Completing CPARS Assessments

Responsibility for completing quality CPARS assessments in a timely manner rests with the
Assessing Official (AO), who may be the program manager (PM), contracting officer's technical
representative (COTR) or the equivalent individual responsible for program, project, or
task/job/delivery order execution. The AO is supported in this process by the Assessing Official
Representative (AOR). The AOR may be the Performance Evaluator, Quality Assurance
Evaluator, Requirements Indicator, or Task Monitor for tasks under IDIQ contracts. The AO and
AOR will be responsible for entering the ratings and narratives for each assessment performed.

The CPARS process is designed with checks-and-balances to facilitate the objective and
consistent evaluation of contractor performance. Both Government and contractor perspectives
are captured on the CPAR form. The opportunity to review and comment on the CPAR by the
designated Government and contractor personnel makes a complete CPAR.
In the event there are multiple CPARs on one contract due to geographically separated units, the
AO of the office with the preponderance of the effort (based on largest dollar value) on the
contract will consolidate the multiple CPARs and provide a consensus evaluation and rating of
the performance prior to forwarding to the contractor.

1.4 CPAR Evaluation Methodology

The value of a CPAR to a future source selection team is linked to the care the AO takes in
preparing a quality and timely narrative to accompany the CPAR ratings. It is of the utmost
importance that the AO submits a rating consistent with the definitions of each rating and
thoroughly describes the circumstances surrounding a rating. The definitions of each rating,
together with related guidance for preparing the narrative, are provided in Attachment 1.

Each evaluation must be based on objective data (or subjective data when objective data is not
available) supported by program and contract management records. The following sources of
data are recommended:

      Contractor operations reviews
      Status and progress reviews
      Production and management reviews
      Management and engineering process reviews (e.g. risk management, requirements
       management, etc.)
      Cost performance reports and other cost and schedule metrics
      Other program measures and metrics such as:
           o Measures of progress and status of critical resources
           o Measures of product size and stability
           o Measures of product quality and process performance
           o Customer feedback/comments and satisfaction ratings
      Systems engineering and other technical progress reviews
      Technical interchange meetings
      Physical and functional configuration audits
      Quality reviews and quality assurance evaluations
      Subcontracting reports
      Earned contract incentives and award fee determinations

Subjective assessments concerning the cause or ramifications of the contractor's performance
may be provided; however, speculation or conjecture must not be included.

1.5 Uses of Summary CPAR Data

Summary data from the CPARS database or from the reports themselves may be used to measure
the status of industry performance and support continuous process improvement. Further
analysis of data from the CPARS database may be accomplished by the CPAR Focal Point for
internal Government use but is not authorized for release outside the Government.

1.6 Change-of-Name/Novation
See AMS Procurement Guidance T3.10.1A.8 for guidance in these circumstances since the Dun
& Bradstreet Universal Numbering System (DUNS), Commercial and Government Entity
(CAGE) codes and contractor names may be affected in the CPARS. The AO of each contract
affected by any such changes is ultimately responsible for ensuring that the contract information
in the CPARS is current and correct.

2.0 Considerations for Use

Examples of FAA acquisitions for which CPARS may be appropriate are the following
(individually or in combination):

      Technically complex,
      High dollar value, and/or
      More than one year in duration

2.1 CPARS for Indefinite-Delivery Contracts, Basic Ordering Agreements (BOAs) and
Blanket Purchase Agreements (BPAs)

For indefinite-delivery contracts and BPAs using CPARS, a CPAR must be completed on each
order as considered appropriate. The cognizant program office for the contract or agreement will
determine whether CPARs will be completed:

      On each order meeting a pre-determined threshold, and combining orders into one CPAR
      On each order, or
      By combining all orders into one CPAR (regardless of dollar value).

In cases where each order is below the pre-determined threshold and, combined, they add up to
the threshold, complete a CPAR at the basic contract or agreement level in CPARS by
combining all orders, provided that a single ordering/requiring activity exists and the effort on
each order is similar.

Combining orders into one CPAR may not be feasible, when contracts are used by multiple
activities or agencies, or when individual orders could be significantly different. When orders are
combined, the narrative describing the contractor's performance on each order, both positive and
negative, must be included so that the breadth and quality of information is available for source
selection official use.

For BOA orders, a CPAR must only be completed on each order meeting the threshold.

If a consolidated CPAR for all orders is completed, the period of performance for the assessment
shall be based on the effective date/award date of the basic contract and each subsequent,
exercised option year period. Where possible, each order number and title may be included in
Block 17. Narrative must be provided on the contractor’s performance on each order (in Block
20) so that the breadth and quality of information on the order is available for source selection
official use.
If separate CPARs for any single orders are accomplished, the period of performance for the
assessments will be based on the effective date/award date of each individual order.

2.2 CPARs for Orders Under Federal Supply Schedules

For CPARS evaluations on Federal Supply Schedule Orders, the period of performance for the
assessment shall be based on the effective date/award date of the individual order.

2.3 Joint Ventures

When the joint venture on a contract using CPARS has a unique CAGE code and DUNS
number, a single CPAR will be prepared for the joint venture using those CAGE and DUNS
codes. If the joint venture does not have a unique CAGE code and DUNS code, separate CPARs
containing identical narratives will be prepared for each participating contractor and will
reference that the evaluation is based on performance under a joint venture and will identify the
contractors that were part of the joint venture.

2.4 Letter or Ceiling Priced Contracts

Assessment information regarding performance under letter or ceiling priced contracts using
CPARS must be included in the annual evaluation. If the final negotiated contract type is not a
cost-type, cost information for the period such an action was in effect (if applicable) must be
included under the Cost rating element in the CPAR. If the final negotiated contract type is a
cost-type, cost information for the entire period of performance must be included under the Cost
rating element. The supporting narrative must fully explain the contractor’s performance during
the action, including throughout definitization. The contractor’s performance under the
undefinitized period must be separately identified but considered in the overall CPAR.

2.5 Subcontractor Assessments

Assessments will not be completed on subcontractor performance. However, an assessment will
address the prime contractor’s ability to manage and coordinate subcontractor efforts, if
applicable, as well as compliance with statutory requirements of the Small Business
Subcontracting Program.

3.0 FAA Responsibilities

The FAA will:.

      Establish procedures to implement CPARS. These procedures will include training
       requirements for Focal Points, AOs, ROs, and Contractor Representatives to ensure
       procedures for monitoring the timely completion of reports, report integrity (e.g., quality
       of reports) and overall CPARS system administration are in place.
      Establish CPARS Focal Point(s)
      Register new contracts using CPARS in the system within 30 calendar days after contract
       award with the information for blocks 1-14 of the CPARS form. Registering the contract
       will establish the record and facilitate subsequent CPARS reporting.


3.1 CPARS Roles and Responsibilities

3.1.1 Agency Point of Contact (DOT Office of the Senior Procurement Executive (M-60))

The Agency Point of Contact is DOT, which responsible for administrative oversight of the
CPARS process. Duties include:

      Obtaining Command Point of Contact access to CPARS
      Assigning of Senior Command Official(s)
      Serving on CPARS Operational Requirements Committee
      Monitoring to ensure effective implementation of the CPARS process

3.1.2 Senior Command Official (FAA Acquisition Policy Group (AJA-A1))

      Obtaining Senior Command Official access to CPARS by contacting the Agency Point of
       Contact
      Coordination and submittal of subordinate organization CPARS Focal Points to the
       CPARS Program Office
      Assistance to subordinate organization CPARS Focal Points (e.g., training, monitoring,
       and policy)
      Evaluating quality and compliance metrics of subordinate organizations
      Providing metrics for management, as requested
      Reviewing and providing subordinate organization issues to the CPARS Focal Point
       and/or the CPARS Program Office

3.1.3 Focal Point (FAA Procurement and Information Services Team (AJA-A12))

      Registering contracts using CPARS in the system within 30 calendar days of contract
       award
      Training in their prospective agency
      Assigning access authorization for FAA and contractor personnel (complete conntract
       authorization based on information from the Contracting Officer, COTR/Project Officer,
       and contractor personnel authorized to appoint a designated representative)
      CPARS account management and maintenance
      Control and monitoring of CPARS, including the status of overdue evaluations
      Establishing processes to monitor quality reports in a timely manner
      Troubleshoot user errors-if cannot be mitigated, contact the CPARS Help Desk

3.1.4 Assessing Official (AO) (FAA COTR, Program/Project Manager, or Program Office
Representative)
      Responsible for completing the CPAR
      Reviewing comments from the designated contractor representative once the evaluation
       has been returned by the contractor or after 30 days have lapsed
      After receiving and reviewing the contractor’s comments on the CPAR, the AO may
       revise the assessment, including the narrative. The AO will notify the contractor of any
       revisions made to a report as a result of the contractor’s comments. Such a revised report
       will not be sent to the contractor for further comment. The contractor will have access to
       both the original and final reports in CPARS when the FAA finalizes the evaluation.

3.1.5 Contractor Representative

The contractor on a given contract must designate two representatives to whom the evaluations
will be sent automatically and electronically. The name, title, e-mail address and phone number
of the designated contractor representative shall be provided to the Contracting Officer who will,
in turn, provide that information to the CPARS Focal Point for authorization access. Any
changes in designated contractor personnel shall be the sole responsibility of the contractor to
inform the Contracting Officer or Contract Specialist who will in turn forward the information to
the CPARS Focal Point. The designated contractor representative has the authority to:

      Receive the Government evaluation from the AO
      Review/comment/return evaluation within 30 calendar days. If the contractor desires a
       meeting with the AO to discuss the CPAR, it must be requested, in writing, no later than
       seven calendar days from the receipt of the CPAR. The meeting will be held during the
       contractor’s 30-day review period.

3.1.6 Reviewing Official (RO) (FAA Contracting Officer)

The Reviewing Official is the final arbiter when there is disagreement between the government
and the contractor. The RO must review and sign the assessment when the contractor indicates
non-concurrence with the CPAR or when the contractor is non-responsive. The RO has the
authority to:

      Provide narrative comment (the Reviewing Official's comments supplement those
       provided by the AO. They do not replace the ratings provided by the AO).
      Sign the CPAR (at this point it is considered final and is posted in the CPARS and is
       available for Source Selection Official use in the PPIRS)
      Ensuring a copy of the completed evaluation is placed in the contract file

4.0 Frequency of Reporting

Generally, reporting is done on an annual basis. When an out-of-cycle CPAR is required,
however, it is acceptable to complete two CPARS in a given year for the contract. Out-of-cycle
CPARs do not alter the annual reporting requirement. For example, if the regular CPAR period
of performance ends on 30 September 2012 and an out-of-cycle CPAR is completed which
covers a performance period that ends on 1 May 2012, the next intermediate CPAR report is still
required to cover the period of performance from 1 October 2011 to 30 September 2012. A
period of performance overlap is only permitted when an out-of-cycle CPAR report has been
prepared.

4.1 Initial Reports

An initial CPAR is required for new contracts using CPARS that have a period of performance
greater than 365 calendar days. The initial CPAR must reflect evaluation of at least the first 180
calendar days of performance under the contract, and may include up to the first 365 calendar
days of performance. For contracts with a period of performance of less than 365 calendar days,
see “Final Reports” below.

4.2 Intermediate Reports

Intermediate CPARs are required every 12 months throughout the entire period of performance
of the contract after the initial report and up to the final report. An intermediate CPAR is also
required:

      Upon a significant change in the quality of contractor performance, or
      Upon a significant change within the agency, provided that a minimum of six months of
       performance has occurred, such a change in program management responsibility:

An intermediate CPAR must be done prior to any transfer of Assessing Official duties from one
individual to another to ensure continuity.

An intermediate CPAR is limited to contractor performance occurring after the preceding normal
cycle CPAR. To improve efficiency in preparing the CPAR, the CPAR should be completed
together with other reviews (e.g., award fee determinations, major program events, program
milestones and quality assurance surveillance records).

4.3 Final Report

A final CPAR must be completed upon contract completion or delivery of the final major end
item on contract. Final Reports are to be prepared on all contracts using CPARS with a period of
performance of less than 365 calendar days. The final CPAR does not include cumulative
information but is limited to the period of contractor performance occurring after the preceding
CPAR. The CPAR Focal Point has the authority to approve extensions when special
circumstances arise.

4.4 Out-of-Cycle Reports

An Out-of-Cycle CPAR may be appropriate when there is a significant change in performance
that alters the assessment in one or more evaluation area(s). The contractor may request a new
assessment or the AO may unilaterally prepare a new evaluation and process a new CPAR
through the automated CPARS system. The determination as to whether or not to update an
evaluation will be made solely by the AO. The evaluation will follow the same workflow as the
annual evaluations and will be posted electronically in CPARS and PPIRS after
review/coordination through the FAA and contractor.

4.5 Addendum Reports

Addendum reports may be prepared, after the final past performance evaluation, to record the
contractor’s performance relative to contract closeout, warranty performance and other
administrative requirements.

5.0 Records Retention and Disposition

All records created under this document must be retained and disposed of in accordance with
agency procedures and any applicable program security requirements.

5.1 CPAR Markings and Protection

Those granted access to CPARS are responsible for ensuring that CPARs are appropriately
marked and handled. All CPAR forms, attachments and working papers must be marked “FOR
OFFICIAL USE ONLY/SOURCE SELECTION INFORMATION”. Caution must be exercised
in transmitting any CPAR as an attachment to an email message.

CPARs may also contain information that is proprietary to the contractor. Information contained
on the CPAR, such as trade secrets and protected commercial or financial data obtained from the
contractor in confidence, must be protected from unauthorized disclosure. AOs and ROs must
annotate on the CPAR if it contains material that is a trade secret, etc., to ensure that
future readers of the evaluations in the PPIRS are informed and will protect as required.
The following guidance applies to protection both internal and external to the FAA.

5.1.1 Internal FAA Protection

CPARs must be treated as source selection information at all times. Information contained in the
CPAR must be protected in the same manner as information contained in source selection files.

5.1.2 External Government Protection

Due to the sensitive nature of CPARs, disclosure of CPAR data to contractors other than the
contractor that is the subject of the report, or other entities outside the FAA, is not authorized.
Disclosure of CPAR data to advisory and assistance support contractors other than the contractor
that is the subject of the report is strictly prohibited. A contractor will be granted access to its
CPARs maintained in CPARS by the appropriate Focal Point.

5.2 Freedom of Information Act (FOIA)

Contractor performance information is privileged source selection information. It is also
protected by the Privacy Act and is not releasable under the Freedom of Information Act.
Performance assessments may be withheld from public disclosure under Exemption 5 of the
Freedom of Information Act. The FOIA office must coordinate the request with the CPARS
PMO and local FAA Focal Point.

5.3 Use of CPARS in Source Selection

CPARs provide an assessment of ongoing performance of contractors. Each report consists of a
narrative evaluation by the AO, the contractor’s comments, if any, relative to the assessment and
the RO’s acknowledged consideration and reconciliation of significant discrepancies between the
AO’s evaluation and the contractor’s comments. Source selection officials retrieve CPARs by
using the PPIRS.

5.4 CPAR Format

See Attachments 2, 3, or http://www.cpars.csd.disa.mil/.

Attachment 1

      Evaluation Rating Definitions (Excluding Utilization of Small Business)
            Rating                        Definition                     Note
Dark Blue/Exceptional            Performance meets           To justify an Exceptional
                                 contractual requirements rating, identify multiple
                                 and exceeds many to the significant events and state
                                 Government’s benefit. The how they were of benefit to
                                 contractual performance of the Government. A
                                 the element or sub-         singular benefit, however,
                                 element being assessed      could be of such magnitude
                                 was accomplished with few that it alone constitutes an
                                 minor problems for which Exceptional rating. Also,
                                 corrective actions taken by there must have been NO
                                 the contractor was highly significant weaknesses
                                 effective.                  identified.
Purple/Very Good                 Performance meets           To justify a Very Good
                                 contractual requirements rating, identify a significant
                                 and exceeds some to the event and state how it was
                                 Government’s benefit. The a benefit to the
                                 contractual performance of Government. There must
                                 the element or sub-         have been no significant
                                 element being assessed      weaknesses identified.
                                 was accomplished with
                                 some minor problems for
                                 which corrective actions
                                 taken by the contractor
                                 was effective.
Green/Satisfactory               Performance meets           To justify a Satisfactory
                                 contractual requirements. rating, there must have
                                 The contractual             been only minor problems,
                                 performance of the          or major problems the
                                 element or sub-element      contractor recovered from
                                 contains some minor         without impact to the
                                 problems for which          contract. There must
                                             corrective actions taken by have been NO significant
                                             the contractor appear or    weaknesses identified.
                                             were satisfactory.          Contractors will not be
                                                                         assessed a rating lower
                                                                         than Satisfactory solely for
                                                                         not performing beyond the
                                                                         requirements of the
                                                                         contract.
Yellow/Marginal                              Performance does not meet To justify Marginal
                                             some contractual            performance, identify a
                                             requirements. The           significant event in each
                                             contractual performance of category that the
                                             the element or sub-         contractor had trouble
                                             element being assessed      overcoming and state how
                                             reflects a serious problem it impacted the
                                             for which the contractor    Government. A Marginal
                                             has not yet identified      rating must be supported
                                             corrective actions. The     by referencing the
                                             contractor’s proposed       management tool that
                                             actions appear only         notified the contractor of
                                             marginally effective or     the contractual deficiency
                                             were not fully              (e.g., management,
                                             implemented.                quality, safety, or
                                                                         environmental deficiency
                                                                         report or letter).
Red/Unsatisfactory                           Performance does not meet To justify an Unsatisfactory
                                             most contractual          rating, identify multiple
                                             requirements and recovery significant events in each
                                             is not likely in a timely category that the
                                             manner. The contractual contractor had trouble
                                             performance of the        overcoming and state how
                                             element or sub-element    it impacted the
                                             contains a serious        Government. A singular
                                             problem(s) for which the  problem, however, could
                                             contractor’s corrective   be of such serious
                                             actions appear or were    magnitude that it alone
                                             ineffective.              constitutes an
                                                                       unsatisfactory rating. An
                                                                       Unsatisfactory rating must
                                                                       be supported by
                                                                       referencing the
                                                                       management tools used to
                                                                       notify the contractor of the
                                                                       contractual deficiencies
                                                                       (e.g., management,
                                                                       quality, safety, or
                                                                       environmental deficiency
                                                                       reports, or letters).

NOTE 1: Plus or minus signs may be used to indicate an improving (+) or worsening (-) trend insufficient to
change the assessment status.
NOTE 2: N/A (not applicable) must be used if the ratings are not going to be applied to a particular area for
evaluation.

          Evaluation Ratings Definitions (Utilization of Small Business)
            Rating                      Definition                      Note
Dark Blue/Exceptional          Exceeded all negotiated      To justify an Exceptional
                               subcontracting goals or      rating, identify multiple
                               exceeded at least one goal significant events and state
                               and met all of the other     how they were a benefit to
                               negotiated subcontracting small business utilization.
                               goals for the current        A singular benefit,
                               period. Had exceptional      however, could be of such
                               success with initiatives to magnitude that it
                               assist, promote, and utilize constitutes an Exceptional
                               small business (SB), small rating. Ensure that small
                               disadvantaged business       businesses are given
                               (SDB), women-owned           meaningful, innovative
                               small business (WOSB),       work directly related to the
                               veteran-owned small          project, rather than
                               business (VOSB) and          peripheral work, such as
                               service disabled veteran     cleaning offices, supplies,
                               owned small business         landscaping, etc. Also,
                               (SDVOSB). Complied with there must have been no
                               AMS, 3.6.1-3 Utilization of significant weaknesses
                               Small, Small                 identified.
                               Disadvantaged and
                               Women-Owned, and
                               Service-Disabled Veteran
                               Owned Small Business
                               Concerns (February 2009).
                               Exceeded any other small
                               business participation
                               requirements incorporated
                               in the contract, including
                               the use of small businesses
                               in mission critical aspects
                               of the program. Went
                               above and beyond the
                               required elements of the
                               subcontracting plan and
                               other small business
                               requirements of the
                               contract. Completed and
                               submitted Individual
                               Subcontract Reports and/or
                               Summary Subcontract
                               Reports in an accurate and
                               timely manner.
Purple/Very Good               Met all of the negotiated    To justify a Very Good
                               subcontracting goals in the rating, identify a significant
                               traditional socio-economic event and state how they
                               categories (SB, SDB and      were a benefit to small
                     WOSB) and met at least       business utilization.
                     one of the other socio-      Ensure that small
                     economic goals (SDVOSB) businesses are given
                     for the current period. Had meaningful, innovative
                     significant success with     work directly related to the
                     initiatives to assist,       project, rather than
                     promote and utilize SB,      peripheral work, such as
                     SDB, WOSB, VOSB, and         cleaning offices, supplies,
                     SDVOSB. Complied with        landscaping, etc. There
                     AMS, 3.6.1-3. Met or         must be no significant
                     exceeded any other small weaknesses identified.
                     business participation
                     requirements incorporated
                     in the contract, including
                     the use of small businesses
                     in mission critical aspects
                     of the program.
                     Endeavored to go above
                     and beyond the required
                     elements of the
                     subcontracting plan.
                     Completed and submitted
                     Individual Subcontract
                     Reports and/or Summary
                     Subcontract Reports in an
                     accurate and timely
                     manner.
Green/Satisfactory   Demonstrated a good faith To justify a Satisfactory
                     effort to meet all of the    rating, there must have
                     negotiated subcontracting been only minor problems,
                     goals in the various socio- or major problems the
                     economic categories for the contractor has addressed
                     current period. Complied or taken corrective action.
                     with AMS, 3.6.1-3. Met There must have been no
                     any other small business     significant weaknesses
                     participation requirements identified.
                     included in the contract.
                     Fulfilled the requirements
                     of the subcontracting plan
                     included in the contract.
                     Completed and submitted
                     Individual Subcontract
                     Reports and/or Summary
                     Subcontract Reports in an
                     accurate and timely
                     manner.
Yellow/Marginal      Deficient in meeting key     To justify a Marginal
                     subcontracting plan          rating, identify a significant
                     elements. Deficient in       event that the contractor
                     complying with AMS,          had trouble overcoming
                     3.6.1-3, and any other       and how it impacted small
                     small business participation business utilization. A
                                     requirements in the          Marginal rating must be
                                     contract. Did not submit     supported by referencing
                                     Individual Subcontract       the actions taken by the
                                     Reports and/or Summary government that notified
                                     Subcontract Reports in an the contractor of the
                                     accurate or timely           contractual deficiency.
                                     manner. Failed to satisfy
                                     one or more requirements
                                     of a corrective action plan
                                     currently in place;
                                     however, does show an
                                     interest in bringing
                                     performance to a
                                     satisfactory level and has
                                     demonstrated a
                                     commitment to apply the
                                     necessary resources to do
                                     so. Required a corrective
                                     action plan.
Red/Unsatisfactory                   Noncompliant with AMS        To justify an Unsatisfactory
                                     3.6.1-3, and any other       rating, identify multiple
                                     small business participation significant events that the
                                     requirements in the          contractor had trouble
                                     contract. Did not submit     overcoming and state how
                                     Individual Subcontract       it impacted small business
                                     Reports and/or Summary utilization. A singular
                                     Subcontract Reports in an problem, however, could
                                     accurate or timely           be of such serious
                                     manner. Showed little        magnitude that it alone
                                     interest in bringing         constitutes an
                                     performance to a             Unsatisfactory rating. An
                                     satisfactory level or is     Unsatisfactory rating must
                                     generally uncooperative.     be supported by
                                     Required a corrective        referencing the actions
                                     action plan.                 taken by the government
                                                                  to notify the contractor of
                                                                  the deficiencies. When an
                                                                  Unsatisfactory rating is
                                                                  justified, the Contracting
                                                                  Officer must consider
                                                                  whether the contractor
                                                                  made a good faith effort to
                                                                  comply with the
                                                                  requirements of the
                                                                  subcontracting plan
                                                                  required and any other
                                                                  applicable clauses.

NOTE 1: Plus or minus signs may be used to indicate an improving (+) or worsening (-) trend
insufficient to change assessment status.
NOTE 2 Zero percent is not a goal unless the Contracting Officer determined when negotiating
the subcontracting plan that no subcontracting opportunities exist in a particular socio-economic
category. In such cases, the contractor shall be considered to have met the goal for any socio-
economic category where the goal negotiated in the plan was zero.

Attachment 2 Instructions for Completing a Systems CPAR

A2.1 The Systems Business Sub-Sectors (not all of which are applicable to FAA procurements)
are Aircraft, Shipbuilding, Space, Ordnance, Ground Vehicles, Training Systems, or Other
Systems.

A2.2 Block 1 Name/Address of Contractor. State the name and address of the division or
subsidiary of the contractor that is performing the contract. Identify the parent corporation (no
address required). Identify the CAGE code, DUNS+4 number, Federal Supply Classification
(FSC) or Service Code, and North American Industrial Classification System (NAICS) Code.
All codes can be accessed by using the on-screen “lookup” function provided in the electronic
form.

A2.3 Block 2 Type Report. Indicate whether the CPAR is an initial, intermediate, or final
report. If this is an “out-of-cycle” report, select “out-of-cycle.” If this is a report to record
contractor performance relative to contract closeout or other administrative requirements, select
“Addendum.”

A.2.4 Block 3 Period of Performance Being Assessed. State the period of performance
covered by the report (dates must be in MM/DD/YYYY format). The initial period of
performance should not cover less than six months of actual performance.

A2.4.1 Period of Performance for Delayed Starts, Protests or Phase In Periods. In the case
of delayed starts or protests, the initial period of performance may cover more than twelve
months of time since contract award, but normally no more than twelve months of actual contract
performance. Initial periods reporting on performance greater than 12 months (such as for
phase-in periods) must be approved by the CPAR Focal Point and coordinated with the
contractor. The period of performance should not already include reported efforts except when
an out-of-cycle CPAR has been processed.

A2.4.2 Period of Performance for Intermediate/Final Reports. CPAR assessments for
intermediate and final reports should cover a 12 month period of performance. Exceptions to
this rule for special circumstances, such as a period of performance that ends one month before
contract completion or in those instances (up to six months beyond the annual period) where the
performance has been extended must be approved by the CPAR Focal Point.

A2.4.3 Period of Performance for Out-of-Cycle Reports. Select “Out-of-Cycle” from the
drop-down menu if the AO elects to prepare an out-of-cycle report which will be posted to
CPARS for a time period which overlaps the regularly scheduled performance period if there has
been a significant change in the performance which alters the assessment in one or more
evaluation area(s) since the last performance period. If the AO chooses to have the Out-of-Cycle
report posted in the CPARS AIS (and ultimately the PPIRS), the CPAR will be processed
through the regular work flow (Government and contractor review). See Paragraph 4.4 for more
information on Out-of-Cycle reports.

A.2.3.5 Block 4a Contract Number. Use the contract number as identified on the contract,
except in the case of BOAs, BPAs, GSA schedule and other agency orders. If an order/call is
issued under a BOA, BPA, GSA schedule or other agency contract/agreement, the contract
number in CPARS should match the master contract number. The order/call number field should
be used to reflect the contract/schedule/agreement number for the order/call.

A2.6 Block 4b Business Sector and Sub Sector. Select Services/IT/Operations

A2.7 Block 5 Contracting Office (Organization and Code). Identify the contracting office
symbol..

A2.8 Block 6 Location of Contract Performance. Provide a geographical reference (e.g.,
nearest city and installation name).

A2.9 Block 7a Contracting Officer. Self-explanatory.

A2.9.1 Block 7b Phone Number. Include commercial phone number in the following format:
(XXX) XXX-XXXX

A2.10 Block 8a Contract Award Date. Identify the date of contract award or select the date on
the on-screen, drop-down calendar.

A2.10.1 Block 8b Contract Effective Date. Identify the date (MM/DD/YYYY) that actual
contract performance is set to begin or select the on-screen calendar only if that date is later than
Block 8a, Contract Award Date.

A2.11 Block 9 Contract Completion Date. Identify the last possible date of contract
performance (e.g., the last calendar day of the last option period) or select the date on the on-
screen, drop-down calendar.

A2.12 Block 10 Contract Percent Complete/Delivery Order Status. State the current
percent of the contract that is complete. If Cost Performance Reports (CPR) or Cost/Schedule
Status Reports (C/SSR) data is available, calculate percent complete by dividing cumulative
Budgeted Cost of Work Performed (BCWP) by Contract Budget Base (CBB) (less management
reserve) and multiply by 100. CBB is the sum or negotiated cost plus estimated cost of
authorized undefinitized work. If CPR or C/SSR data is not available, estimate percent complete
by dividing the number of months elapsed by total number of months in contract period of
performance and multiplying by 100. In the event an Indefinite Delivery contract is utilized,
estimate the percent complete.

A2.13 Block 11 Awarded Value. Enter the total value of the contract, including unexercised
options. For delivery/task/job order contracts where orders will be assessed under a single
CPAR, enter the maximum ordering amount under the contract, including options. For
delivery/task/job order contracts where orders will be assessed on an individual basis, enter the
awarded value of the individual order. For BOAs/BPAs where orders/calls will be assessed
individually, enter the awarded value of the individual order/call.

A2.14 Block 12 Current Contract Dollar Value. State the current obligated amount
including modifications and options that have been exercised. For incentive contracts, state the
target price or total estimated amount. For delivery/task order contracts where orders will be
assessed under a single CPAR, state the total amount obligated on all delivery orders, including
modifications. For delivery/task/job order contracts where orders will be assessed on an
individual basis, state the current obligated amount of the individual order, including
modifications. For BOAs/BPAs where orders/calls will be assessed individually, state the
current obligated amount of the individual order/call, including modifications.

A2.15 Block 13 Basis of Award. Identify the basis of award by selecting competitive or non-
competitive. If the CPAR is for a single order/call, select the basis of award for that order/call.

A2.16 Block 14 Contract Type. Identify the contract type. For mixed contract types, select the
predominant contract type and identify the other contract type in the "mixed" block.

A2.17 Block 15 Key Subcontractors and Description of Effort Performed. Identify
subcontractors, including CAGE code and DUNS +4 number, performing either a critical aspect
of the contracted effort or more than 25 percent of the dollar value of the effort

A2.18 Block 16 (Systems) Program Title and Phase of Acquisition. Provide a descriptive
narrative of the program. Spell out all abbreviations and acronyms. Identify overall program
phase and production lot (for example, concept development, engineering and manufacturing
development, low-rate initial production, or full-rate production (Lot 1)), and any specific
aspects of the phase of the acquisition being evaluated. Identify milestone phases, if applicable.

Block 16 (Ship Repair and Overhaul) – Type of Availability. Not applicable to FAA
contracts.

A2.19 Block 17 Contract Effort Description. This section is of critical importance to future
source selection teams. The description should be detailed enough to assist a future source
selection officials in determining the relevance of this program to their source selection. It is
important to address the complexity of the contract effort and the overall technical risk
associated with accomplishing the effort. For intermediate CPARs, a description of key
milestone events that occurred in the review period may be beneficial (e.g., Critical Design
Review (CDR), Functional Configuration Audit (FCA)), as well as major contract modifications
during the period. Ensure all acronyms are identified.

Provide a complete description of the contract effort that identifies key technologies,
components, subsystems, and requirements. For task/delivery/job order contracts, state the
number of tasks issued during the period, tasks completed during the period, and tasks that
remain active.
For contracts that include multiple functional disciplines or activities, separate them into
categories to:

   1. Reflect the full scope of the contract, and
   2. Allow grouping of similar work efforts within the categories to avoid unnecessary
      segregation of essentially similar specialties or activities. Each category or area should
      be separately numbered, titled and described within Block 17 to facilitate cross-
      referencing with the evaluation of the contractor's performance within each category in
      Blocks 18 and 19.

A2.20 Small Business Utilization. Answer the following questions:

   1. Does this contract include a subcontracting plan?
   2. Is small business subcontracting under this contract included in a comprehensive small
      business subcontracting plan?
   3. Is small business subcontracting under this contract included in a commercial small
      business subcontracting plan?
   4. Date of last Individual Subcontracting Report (ISR)/Summary Subcontracting Report
      (SSR)?

A2.21 Block 18 Evaluation Areas. Evaluate each area based on the following criteria:

A2.21.1 Each area assessment must be based on objective data that will be provided in Block
20. Facts to support specific areas of evaluation must be requested from the AORs, AOs and
other Government specialists familiar with the contractor's performance on the contract under
review. Such specialists may, for example, be from engineering, manufacturing, quality,
logistics (including provisioning), contracting, maintenance, security, etc.

A2.21.2 The amount of risk inherent in the effort should be recognized as a significant factor
and taken into account when assessing the contractor's performance. For example, if a contractor
meets an extremely tight schedule, a dark blue (exceptional) may be appropriate, or meeting a
tight schedule with few delinquencies, a green (satisfactory) with a plus sign assessment may be
given in recognition of the inherent schedule risk. When a contractor identifies significant
technical risk and takes action to abate those risks, the effectiveness of these actions should be
included in the narrative supporting the Block 18 ratings.

A2.21.3 The CPAR is designed to assess prime contractor performance. In those evaluation
areas where subcontractor actions have significantly influenced the prime contractor's
performance in a negative or positive way, record the subcontractor actions in Block 20.

A2.21.4 Many of the evaluation areas in Block 18 represent groupings of diverse elements. The
AO should consider each element and use the area rating to highlight significant issues. In
addition, the AO should clearly focus on the contractor’s “results” as they may be appropriate for
the period being assessed in determining the overall area rating.
A2.21.5 Evaluate all areas which pertain to the contract under evaluation unless they are not
applicable (N/A).
A2.21.6 When performance has changed from one period to another such that a change in
ratings results, the narrative in Block 20 must address each change.

A2.21.7 The AO should use customary industry quantitative measures where they are applicable
if the contract is for commercial products.

A2.21.8 Ratings will be in accordance with the definitions described in Attachment 2,
"Evaluation Ratings Definitions."

A2.22 Block 18a Technical (Quality of Product). This element is comprised of an overall
rating and six sub-elements. Activity critical to successfully complying with contract
requirements must be assessed within one or more of these sub-elements. The overall rating at
the element level is the AO’s integrated evaluation as to what most accurately depicts the
contractor’s technical performance or progress toward meeting requirements. This assessment is
not a roll-up of the sub-element assessments.

A2.22.1 Block 18a(1) Product Performance. Assess the achieved product performance
relative to performance parameters required by the contract.

A2.22.2 Block 18a(2) Systems Engineering. Assess the contractor's effort to transform
operational needs and requirements into an integrated system design solution.

A2.22.2.1 Areas of focus should be: the planning and control of technical program tasks, the
quality and adequacy of the engineering support provided throughout all phases of contract
execution, the integration of the engineering specialties, management of interfaces,
interoperability, and the management of a totally integrated effort of all engineering concerns to
meet cost, technical performance, and schedule objectives.

A2.221.2.2 System engineering activities ensure that integration of these engineering concerns
is addressed up-front and early in the design/development process. The assessment should cover
these disciplines: systems architecture, design, manufacturing, integration and support,
configuration control, documentation, test and evaluation.

A2.22.2.3 The assessment for test and evaluation should consider success/problems/failure in
developing test and evaluation objectives; planning (ground/air/sea) test, simulations and/or
demonstrations; in accomplishing those objectives and on the timeliness of coordination and
feedback of the test results (simulations/demonstrations) into the design and/or manufacturing
process.

A2.22.2.4 Other activities include production engineering, logistics support analysis,
supportability considerations (maintenance personnel/skills availability or work hour constraints,
operating, and cost constraints, allowable downtime, turnaround time to service/maintain the
system, standardization requirements), survivability, human factors, reliability, quality,
maintainability, availability, inspection, etc. Although some of these activities will be
specifically addressed in other elements/sub-elements (such as product assurance), the focus of
the assessment of systems engineering is on the integration of those specific
disciplines/activities.

A2.22.2.5 The assessment of systems engineering needs to remain flexible to allow the
evaluator to account for program-unique technical concerns and to allow for the changing
systems engineering environment as a program moves through the program phases, e.g.,
Engineering and Manufacturing Development, Production.

A2.22.3 Block 18a(3) Software Engineering. Assess the contractor’s success in meeting
contract requirements for all applicable software engineering based activities and processes.

A2.22.3.1 Software engineering activities include, as appropriate, software development
(design, code, and unit test); application of reuse, COTS, and other non-developmental software
components; integration (including software component integration, system integration and test,
and acceptance test support); and sustainment. Software processes include, for example:
software size, effort, and schedule estimation; requirements analysis, development, and
management; software configuration management; software risk identification and management;
metrics collection and analysis, technical reviews, decision analysis, and software quality
assurance and control, each as they specifically address software engineering activities.

A2.22.3.2 Consider the contractor’s success with respect to:

   1. Planning a software development, integration, and testing effort that includes compatible
      cost, schedule, and performance baselines
   2. Delivering expected software driven capabilities on cost and on schedule
   3. Effective software metrics collection/analysis and status monitoring/reporting that
      provide the software visibility necessary to identify timely corrective actions and
      appropriately execute them
   4. Staffing with the software knowledge, skills, and abilities needed to execute the contract
      across the lifecycle; timely assignment of the appropriate numbers of software staff
   5. Awareness and control of software size and stability to enable tracking and allowing
      growth according to vetted enhancements vice scope creep
   6. Effective testing and integration of developed software within the larger system test and
      evaluation effort
   7. Effective processes to acquire, integrate, and test commercial off-the-shelf software and
      to achieve planned software reuse
   8. Achieving software assurance
   9. Consistent application of documented software engineering and management processes,
      including technical reviews, in alignment with contract requirements

A2.22.4 Block 18a(4) Logistic Support/Sustainment. Assess the success, as appropriate, of
the contractor's performance in accomplishing logistics planning. For example, maintenance
planning; manpower and personnel; supply support; support equipment; technical provisioning
data; training and support; computer resources support; facilities; packaging, handling, storage
and transportation; design interface; the contractor's performance of logistics support analysis
activities and the contractor's ability to successfully support fielded equipment. When the
contract requires technical and/or engineering data deliverables, the cognizant cataloging and/or
standardization activity comments should be solicited.

A2.22.5 Block 18a(5) Product Assurance. Assess how successfully the contractor meets
program quality objectives; e.g., production, reliability, maintainability, inspection, testability,
and system safety, and controls the overall manufacturing process. The PM must be flexible in
how contractor success is measured, e.g., data from design test/operational testing successes,
field reliability and maintainability and failure reports, user comments and acceptance rates,
improved subcontractor and vendor quality, and scrap and rework rates. These quantitative
indicators may be useful later, for example, in source selection evaluations, in demonstrating
continuous improvement, quality and reliability leadership that reflects progress in total quality
management. Assess the contractor's control of the overall manufacturing process to include
material control, shop floor planning and control, status and control, factory floor optimization,
factory design, and factory performance.

A2.22.6 Block 18a(6) - Other Technical Performance. Assess all the other technical activity
critical to successful contract performance. Identify any additional assessment aspects that are
unique to the contract or that cannot be captured in another sub-element.

A2.23 Block 18b Schedule. Assess the timeliness of the contractor against the completion of
the contract, task orders, milestones, delivery schedules, administrative requirements, etc.
Assess the contractor's adherence to the required delivery schedule by assessing the contractor's
efforts during the assessment period that contribute to or affect the schedule variance. Also,
address significance of scheduled events (e.g., design reviews), discuss causes, and assess the
effectiveness of contractor corrective actions.

A2.24 Block 18c Cost Control. (Not Applicable for Firm-Fixed Price or Firm-Fixed Price
with Economic Price Adjustment). Assess the contractor’s effectiveness in forecasting,
managing, and controlling contract cost. Is the contractor experiencing cost growth or underrun,
discuss the causes and contractor-proposed solutions for the cost overruns. For contracts where
task or contract sizing is based upon contractor-provided person hour estimates, the relationship
of these estimates to ultimate task cost should be assessed. In addition, the extent to which the
contractor demonstrates a sense of cost responsibility, through the efficient use of resources, in
each work effort should be assessed.

A2.24.1 Assessment information regarding performance under a UCA shall be included in the
annual evaluation. If the final negotiated contract type is not a cost-type, cost information for the
period the UCA was in effect shall be included under the Cost element. The contractor’s
performance under the UCA shall be separately identified but considered in the overall annual
ratings.

A2.25 Block 18d Management. This element is comprised of an overall rating and three sub-
elements. Activity critical to successfully executing the contract must be assessed within one or
more of the sub-elements. This overall rating at the element level is the AO's integrated
assessment as to what most accurately depicts the contractor’s performance in managing the
contracted effort. It is not a roll-up of the sub-element assessments.
A2.25.1 Block 18d(1) Management Responsiveness. Assess the timeliness, completeness and
quality of problem identification, corrective action plans, proposal submittals (especially
responses to change orders, Engineering Change Proposals (ECPs), or Letter or Ceiling Priced
Contracts), the contractor's history of reasonable and cooperative behavior, effective business
relations, and customer satisfaction. Consider the contractor’s responsiveness to the program as
it relates to meeting contract requirements during the period covered by the report.

A2.25.2 Block 18d(2) Subcontract Management. Assess the contractor’s success with timely
award and management of subcontracts. Assess the prime contractor’s effort devoted to
managing subcontracts and whether subcontractors were an integral part of the contractor’s team.
 Consider efforts taken to ensure early identification of subcontract problems and the timely
application of corporate resources to preclude subcontract problems from impacting overall
prime contractor performance.

A2.25.3 Block 18d(3) Program Management and Other Management. Assess the extent to
which the contractor discharges its responsibility for integration and coordination of all activity
needed to execute the contract; identifies and applies resources required to meet schedule
requirements; assigns responsibility for tasks/actions required by contract; communicates
appropriate information to affected program elements in a timely manner. Assess the
contractor’s risk management practices, especially the ability to identify risks and formulate and
implement risk mitigation plans. If applicable, identify any other areas that are unique to the
contract, or that cannot be captured elsewhere under the Management element.

A2.25.3.1 Integration and coordination of activities should reflect those required by the
Integrated Master Plan/Schedule. Also consider the adequacy of the contractor’s mechanisms
for tracking contract compliance, recording changes to planning documentation and management
of cost and schedule control system, and internal controls, as well as the contractor’s
performance relative to management of data collection, recording, and distribution as required by
the contract.

A2.26 Block 18e Utilization of Small Business. FAA AMS T3.6.1 and Clause 3.6.1-4 contain
requirements for complying with the Small Business Subcontracting Program. Assess whether
the contractor provided maximum practicable opportunity for Small Business (including Alaska
Native Corporations (ANCs) and Indian Tribes) (including Small Disadvantaged Businesses
(which also includes ANCs and Indian Tribes), Women Owned Small Businesses, Veteran
Owned, Service Disabled Veteran Owned Small Business, Historically Black Colleges and
Minority Institutions and ANCs and Indian Tribes that are not Small Disadvantaged Businesses
or Small Businesses) to participate in contract performance consistent with efficient performance
of the contract.

A2.26.1 Assess compliance with all terms and conditions in the contract relating to Small
Business participation. Where applicable, assess compliance with Small Business
Subcontracting Plan (Test Program)) including any program specific data required in the
contract. Assess achievement on each individual goal stated within the contract or
subcontracting plan including good faith effort if the goal was not achieved.
A3.26.2 It may be necessary to seek input from the Small Business specialist, ACO or PCO in
regards to the contractor’s compliance with these criteria, especially when a comprehensive plan
is submitted. In cases where the contractor has a comprehensive subcontracting plan, request the
DCMA Comprehensive Subcontracting Plan Manager to provide input including any program
specific performance information.

A2.26.3 For contracts subject to a commercial subcontracting plan, the Utilization of Small
Business factor should be rated “green” as long as an approved plan remains in place, unless
liquidated damages have been assessed by the Contracting Officer who approved the commercial
plan (see AMS 3.6.1-6). In such case, the Utilization of Small Business area must be rated “red”.

A2.26.4 This area must be rated for all contracts and task orders that contain a small business
subcontracting goal.

A2.26.5 Ratings will be in accordance with definitions described in Attachment 1, "Evaluation
Rating Definitions (Utilization of Small Business)."

A2.26.6 A contract may have no more than one subcontracting plan. Evaluations of the
utilization of small business are required for contracts and orders placed against basic ordering
agreement (BOA) and blanket purchase agreement (BPA) if a subcontracting plan is required.
Evaluations of utilization of small business for single-agency task orders and delivery orders (to
include FSS) are not required and shall not be accomplished unless the Contracting Officer
determines that such evaluations would produce more useful past performance information for
source selection officials than that contained in the overall contract evaluation. Execution of any
subcontracting plan may be addressed in block 20.

A2.27 Block 18f Other Areas. Specify additional evaluation areas that are unique to the
contract or that cannot be captured elsewhere on the form. More than one type of entry may be
included but should be separately labeled. If extra space is needed, use Block 20.

A2.27.1 If the contract contains an award fee clause, enter "award fee" in the "Other Areas"
Block (18f). The AO should translate the award fee earned to color ratings which could prove
more useful for using past performance to assess future performance risk in upcoming source
selections. If award fee information is included in the CPAR, use Block 20 to provide a
description for each award fee. Include the scope of the award fee by describing the extent to
which it covers the total range of contract performance activities, or is restricted to certain
elements of the contract.

A2.27.2 If any other type of contract incentive is included in the contract (excluding contract
share incentives on fixed price or cost-type incentive contracts), it should be reported in a
manner similar to the procedures described above for award fee (by entering "Incentive" in
Block 18f).

A2.27.3 Use Block 18f in those instances where an aspect of the contractor's performance does
not fit into any of the other blocks on the form. As an example, this block may be used to
address security issues, provide an assessment of provisioning line items or other areas as
appropriate.
A2.28 Block 19 Variance (Contract-to-Date). If Cost Performance Report (CPR) or
Cost/Schedule Status Review (C/SSR) data are available, identify the current percent cost
variance to date, the Government's estimated completion cost variance (percent), and the
cumulative schedule variance (percent). Indicate the cutoff date for the CPR or C/SSR used.

A2.28.1 Compute current cost variance percentage by dividing cumulative cost variance to date
(column 11 of the CPR, column 6 of the C/SSR) by the Budgeted Cost of Work Performed
(BCWP) and multiply by 100.

A2.28.2 Compute completion cost variance percentage by dividing the Contract Budget
Baseline (CBB) less the Government's Estimate At Completion (EAC) by CBB and multiplying
by 100. The calculation is [(CBB - EAC)/CBB] X 100. The CBB must be the current budget
base against which the contractor is performing (including formally established Over Target
Baselines (OTB)). If an OTB has been established since the last CPAR, a brief description in
Block 20 of the nature and magnitude of the baseline adjustment must be provided. Subsequent
CPARs must evaluate cost performance in terms of the revised baseline and reference the CPAR
that described the baseline adjustment. For example, "The contract baseline was formally
adjusted on (date); see CPAR for (period covered by report) for an explanation."

A2.28.3 Compute cumulative schedule variance percentage by dividing the Budgeted Cost of
Work Performed (BCWP) less budgeted cost of work scheduled (BCWS) by BCWS and
multiply by 100. The calculation is [(BCWP - BCWS)/BCWS] X 100. If the schedule variance
exceeds 15 percent (positive or negative), briefly discuss in Block 20 the significance of this
variance for the contract effort.

A2.29 Block 20 AO Narrative (see Paragraph 1.4). A factual narrative is required for all
assessments regardless of color rating (e.g., even "green" or “satisfactory” ratings require
narrative support). Cross-reference the comments in Block 20 to their corresponding evaluation
area in Block 18 or 19. Each narrative statement in support of the area assessment must contain
objective data. An exceptional cost performance assessment could, for example, cite the current
underrun dollar value and estimate at completion. A marginal engineering design/support
assessment could, for example, be supported by information concerning personnel changes. Key
engineers familiar with the effort may have been replaced by less experienced engineers.
Sources of data include operational test and evaluation results; technical interchange meetings;
production readiness reviews; earned contract incentives; or award fee evaluations. The AO’s
comments in Block 20 may be up to 16,000 characters (approximately three pages) in CPARS.

A2.29.1 The AO must choose the applicable choice to the following statement after block 20:
“Given what I know today about the contractor’s ability to execute what he promised in his
proposal, I (definitely would not, probably would not, might or might not, probably would or
definitely would) award to him today given that I had a choice.”

A2.30 Block 21 AO Signature. The AO enters his or her name, title, and organization, phone
number (in the following format: (XXX)XXX-XXXX ), email address, FAX number, and signs
and dates the form prior to making it available to the contractor for review.
A2.31 Block 22 Contractor Comments. Completed at the option of the contractor. The
contractor’s narrative comments may be up to 16,000 characters (approximately three pages).

A2.32 Block 23 Contractor Representative Signature. The contractor representative
reviewing/commenting on the CPAR will enter his or her name, title, phone number, email
address, FAX number, and signs and dates the form prior to returning it to the AO.

A2.33 Block 24 RO Comments. The RO must acknowledge consideration of any significant
discrepancies between the AO assessment and the contractor's comments. The RO’s narrative
comments may be up to 16,000 characters (approximately three pages).

A2.34 Block 25 - RO Signature. The RO will enter his or her name, title, organization (AF
users do not include a code), phone number in the following format: (XXX) XXX-XXXX, email
address, FAX number, and date when completing the CPAR.

Attachment 3 Instructions for Completing a Services, Information Technology, or
Operations Support CPAR

A3.1 All business sectors, except Systems, and construction and architect-engineer, will be
completed on this form.

A3.2 Block 1 Name/Address of Contractor. State the name and address of the division or
subsidiary of the contractor that is performing the contract. Identify the parent corporation (no
address required). Identify the CAGE code, DUNS+4 number, Federal Supply Classification
(FSC) or Service Code, and North American Industrial Classification System (NAICS) code. All
codes can be accessed by using the on-screen “lookup” function provided in the electronic form.

A3.3 Block 2 Type Report. Indicate whether the CPAR is an initial, intermediate, or final
report. If this is an “out-of-cycle” report, select “out-of-cycle.” If this is a report to record
contractor performance relative to contract closeout or other administrative requirements, select
“Addendum.”

A3.4 Block 3 Period of Performance Being Assessed. State the period of performance
covered by the report (dates must be in MM/DD/YYYY format). The initial period of
performance should not cover less than six months of actual performance.

A3.4.1 Period of Performance for Delayed Starts, Protests or Phase-In Periods. In the case
of delayed starts or protests, the initial period of performance may cover more than twelve
months of time since contract award, but normally no more than twelve months of actual contract
performance. Initial periods reporting on performance greater than 12 months (such as for
phase-in periods) must be approved by the CPAR Focal Point and coordinated with the
contractor. The period of performance should not already include reported efforts except when
an out-of-cycle CPAR has been processed.

A3.4.2 Period of Performance for Intermediate/Final Reports. CPAR assessments for
intermediate and final reports should cover a 12 month period of performance. Exceptions to
this rule for special circumstances, such as a period of performance that ends one month before
contract completion or in those instances (up to six months beyond the annual period) where the
performance has been extended must be approved by the CPAR Focal Point.

A3.4.3 Period of Performance for Out-of-Cycle Reports. Select “Out-of-Cycle” from the
drop-down menu if the AO elects to prepare an out-of-cycle report which will be posted to the
CPARS AIS for a time period which overlaps the regularly scheduled performance period if
there has been a significant change in the performance which alters the assessment in one or
more evaluation area(s) since the last performance period. If the AO chooses to have the Out-of-
Cycle report posted in the CPARS AIS (and ultimately the PPIRS), the CPAR will be processed
through the regular work flow (Government and contractor review). See Paragraph 4.4 for more
information on Out-of-Cycle reports.

A3.5 Block 4a Contract Number. Use the contract number as identified on the contract,
except in the case of BOAs, BPAs, GSA schedule and other agency orders. If an order/call is
issued under a BOA, BPA, GSA schedule or other agency contract/agreement, the contract
number in CPARS should match the master contract number. The order number field should be
used to reflect the contract/schedule/agreement number for the order/call.

A3.6 Block 4b Business Sector and Sub-Sector. Service/IT/Operations

A3.7 Block 5 Contracting Office (Organization and Code). Identify the contracting office
symbol.

A3.8 Block 6 - Location of Contract Performance. Provide a geographical reference (e.g.,
nearest city and installation name) if performance is on a military installation.

A3.9 Block 7a Contracting Officer. Self-explanatory.

A3.9.1 Block 7b Phone Number. Include the commercial phone number in the following
format: (XXX) XXX-XXXX

A3.10 Block 8a Contract Award Date. Identify the date of contract award or select the date on
the on-screen, drop-down calendar.

A3.10.1 Block 8b Contract Effective Date. Identify the date (MM/DD/YYYY) that actual
contract performance is set to begin or select the on-screen calendar date only if that date is later
than Block 8a, Contract Award Date.

A3.11 Block 9 Contract Completion Date. Identify the last possible date of contract
performance (e.g., the last calendar day of the last option period) or select the date on the on-
screen, drop-down calendar.

A3.12 Block 10 N/A. Not applicable.
A3.13 Block 11 Awarded Value. Enter the total value of the contract, including unexercised
options. For delivery/task/job order contracts where orders will be assessed under a single
CPAR, enter the maximum ordering amount under the contract, including options. For
delivery/task/job order contracts where orders will be assessed on an individual basis, enter the
awarded value of the individual order. For BOAs/BPAs where orders/calls will be assessed
individually, enter the awarded value of the individual order.

A3.14 Block 12 Current Contract Dollar Value. State the current obligated amount including
modifications and options that have been exercised. For incentive contracts, state the target price
or total estimated amount. For delivery/task/job order contracts where orders will be assessed
under a single CPAR, state the total amount obligated on all delivery orders, including
modifications. For delivery/task/job order contracts where orders will be assessed on an
individual basis, state the current obligated amount of the individual order, including
modifications. For BOAs where orders will be assessed individually, state the current obligated
amount of the individual order, including modifications.

A3.15 Block 13 Basis of Award. Identify the basis of award by selecting competitive or non-
competitive. If the CPAR is for a single order/call, select the basis of award for that order/call.

A3.16 Block 14 Contract Type. Identify the contract type. For mixed contract types, select the
predominant contract type and identify the other contract type in the "mixed" block.

A3.17 Block 15 Key Subcontractors and Description of Effort Performed. Identify
subcontractors, including CAGE code and DUNS +4 number, performing either a critical aspect
of the contracted effort or more than 25 percent of the dollar value of the effort. If possible,
include the amount of subcontract costs of the total contract effort. Discussion of the prime
contractor’s management of the subcontractor should be included in Block 18d-Business
Relations.

A3.18 Block 16 Program Title and Phase of Acquisition. Provide a descriptive narrative of
the program. Spell out all abbreviations and acronyms. Identify the type of services (for
example, professional services, maintenance, installation or information technology services).

A3.19 Block 17 Contract Effort Description. Provide a description of the contract effort that
identifies the key requirements and/or type of effort. This section is of critical importance to
future source selection officials. The description should be detailed enough so that it can be used
in determining the relevance of this program to future source selections. It is important to
address the complexity of the contract effort and the overall technical risk associated with
accomplishing the effort. Ensure acronyms are identified. For task/delivery order contracts,
state the number of orders issued during the period.

A3.20 Small Business Utilization. Answer the following questions:

   1. Does this contract include a subcontracting plan?
   2. Is small business subcontracting under this contract included in a comprehensive small
      business subcontracting plan?
   3. Is small business subcontracting under this contract included in a commercial small
      business subcontracting plan?
   4. Date of last Individual Subcontracting Report (ISR) /Summary Subcontracting Report
      (SSR)

A3.21 Block 18 Evaluation Areas. Evaluate each area based on the following criteria:

A3.21.1 Each area assessment must be supported by objective data (or subjective observations)
that will be provided in Block 20. Facts to support specific areas of evaluation must be requested
from the PM, Contracting Officer and other specialists familiar with the contractor's performance
on the contract under review. Such specialists may, for example include the Contracting
Officer’s Representative (COR) for the program and may also be from engineering,
manufacturing, quality, logistics (including provisioning), contracting, maintenance, security,
data, etc.

A3.21.2 The amount of risk inherent in the effort should be recognized as a significant factor
and taken into account when assessing the contractor's performance. When a contractor
identifies significant technical risk and takes action to abate those risks, the effectiveness of these
actions should be included in the narrative supporting the Block 18 ratings.

A3.21.3 The CPAR is designed to assess prime contractor performance. In those evaluation
areas where subcontractor actions have significantly influenced the prime contractor's
performance in a negative or positive way, record the subcontractor actions in Block 20.

A3.21.4 Evaluate all areas which pertain to the contract under evaluation, unless they are not
applicable (“N/A”).

A3.21.5 When performance has changed from one period to another such that a change in
ratings results, the narrative in Block 20 must address each change.

A3.21.6 The AO should use customary industry quantitative measures where they are applicable
if the contract is for commercial products.

A3.21.7 Ratings will be in accordance with the definitions in Attachment 2.

A3.21.8. A fundamental principle of assigning ratings is that contractors will not be assessed a
rating lower than satisfactory solely for not performing beyond the requirements of the contract.

A3.22 Block 18a Quality of Product or Service. Assess the contractor’s conformance to
contract requirements, specifications and standards of good workmanship (e.g., commonly
accepted technical, professional, environmental, or safety and health standards). List and assess
any sub-elements to indicate different efforts where appropriate. Include, as applicable,
information on the following:

   1. Are the reports data accurate?
   2. Does the product or service provided meet the specifications of the contract?
   3. Does the contractor’s work measure up to commonly accepted technical or professional
      standards?
   4. What degree of FAA technical direction was required to solve problems that arise during
      performance?

For Operations Support: Assess how successfully the contractor meets program quality
objectives such as production, reliability, maintainability and inspection. The AO must be
flexible in how contractor success is measured; e.g., using data from field reliability and
maintainability and failure reports, user comments and acceptance rates, and scrap and rework
rates. These quantitative indicators may be useful later, for example, in source selection
evaluations, in demonstrating continuous improvement, quality and reliability leadership that
reflects progress in total quality management. Assess the contractor’s control of the overall
production process to include material control, shop planning and control, and providing status
updates.

A3.23 Block 18b Schedule. Assess the timeliness of the contractor against the completion of
the contract, task orders, milestones, delivery schedules, and administrative requirements (e.g.,
efforts that contribute to or affect the schedule variance).

This assessment of the contractor’s adherence to the required delivery schedule should include
the contractor’s efforts during the assessment period that contributes to or affect the schedule
variance. This element applies to contract closeout activities as well as contract performance.
Instances of adverse actions such as the assessment of liquidated damages or issuance of Cure
Notices, Show Cause Notices, and any other notifications to the contractor of serious contract
performance issues are indicators of problems which may have resulted in variance to the
contract schedule and should, therefore, be noted in the evaluation.

A3.24 Block 18c Cost Control. (Not required for Firm-Fixed Price or Firm-Fixed Price
with Economic Price Adjustment). Assess the contractor’s effectiveness in forecasting,
managing, and controlling contract cost. Include, as applicable, the following information:

   1. Does the contractor keep within the total estimated cost (what is the relationship of the
      negotiated costs and budgeted costs to actuals)?
   2. Did the contractor do anything innovative that resulted in cost savings?
   3. Were billings current, accurate and complete?
   4. Are the contractor’s budgetary internal controls adequate?

Assessment information regarding performance under a UCA shall be included in the annual
evaluation. If the final negotiated contract type is not a cost-type, cost information for the period
the UCA was in effect shall be included under the cost element. The contractor’s performance
under the UCA shall be separately identified but considered in the overall annual ratings.

A3.25 Block 18d Business Relations. Assess the integration and coordination of all activity
needed to execute the contract, specifically the timeliness, completeness and quality of problem
identification, corrective action plans, proposal submittals, the contractor’s history of reasonable
and cooperative behavior (to include timely identification of issues in controversy), customer
satisfaction, timely award and management of subcontracts. Include, as applicable, information
on the following:

   1. Is the contractor oriented toward the customer?
   2. Is interaction between the contractor and the government satisfactory or does it need
      improvement?
   3. Include the adequacy of the contractor’s accounting, billing, and estimating systems and
      the contractor’s management of Government Property (GFP) if a substantial amount of
      GFP has been provided to the contractor under the contract.
   4. Address the timeliness of awards to subcontractors and management of subcontractors,
      including subcontract costs. Consider efforts taken to ensure early identification of
      subcontract problems and the timely application of corporate resources to preclude
      subcontract problems from impacting overall prime contractor performance.
   5. Assess the prime contractor’s effort devoted to managing subcontracts and whether
      subcontractors were an integral part of the contractor’s team.

A3.26 Block 18e Management of Key Personnel (For Services and Information
Technology Business Sectors only - Not Applicable to Operations Support). Assess the
contractor’s performance in selecting, retaining, supporting, and replacing, when necessary, key
personnel. For example:

   1. How well did the contractor match the qualifications of the key position, as described in
      the contract, with the person who filled the key position?
   2. Did the contractor support key personnel so they were able to work effectively?
   3. If a key person did not perform well, what action was taken by the contractor to correct
      this?
   4. If a replacement of a key person was necessary, did the replacement meet or exceed the
      qualifications of the position as described in the contract schedule?

A3.27 Block 18f Utilization of Small Business. FAA AMS T3.6.1 and Clause 3.6.1-4 contain
requirements for complying with the Small Business Subcontracting Program. Assess whether
the contractor provided maximum practicable opportunity for Small Business (including Alaska
Native Corporations (ANCs) and Indian Tribes) (including Small Disadvantaged Businesses
(which also includes ANCs and Indian Tribes), Women Owned Small Businesses, Service
Disabled Veteran Owned Small Business, Historically Black Colleges and Universities and
Minority Educational Institutions and ANCs and Indian Tribes that are not Small Disadvantaged
Businesses or Small Businesses) to participate in contract performance consistent with efficient
performance of the contract.

A3.27.1 Assess compliance with all terms and conditions in the contract relating to Small
Business participation Assess any small business participation goals which are stated separately
in the contract. Assess achievement on each individual goal stated within the contract or
subcontracting plan including good faith effort if the goal was not achieved.
A3.27.2 It may be necessary to seek input from the Small Business Office or Contracting
Officer in regards to the contractor’s compliance with these criteria, especially when a
comprehensive plan is submitted

A3.27.3 For contracts subject to a commercial subcontracting plan, the Utilization of Small
Business factor should be rated “satisfactory” as long as an approved plan remains in place,
unless liquidated damages have been assessed by the Contracting Officer who approved the
commercial plan In such case, the Utilization of Small Business area must be rated
“unsatisfactory”.

A3.27.4 This area must be rated for all contracts and task orders that contain a small business
subcontracting goal.

A3.27.5 Ratings will be in accordance with definitions described in Attachment 2, "Evaluation
Ratings Definitions (Utilization of Small Business)."

A3.27.6 A contract must have no more than one subcontracting plan. Evaluations of the
utilization of small business are required for contracts and orders placed against basic ordering
agreement (BOA) and blanket purchase agreement (BPA) if a subcontracting plan is required.
Evaluations of utilization of small business for single-agency task orders and delivery orders (to
include FSS) are not required and shall not be accomplished unless the Contracting Officer
determines that such evaluations would produce more useful past performance information for
source selection officials than that contained in the overall contract evaluation. Execution of
any subcontracting plan may be addressed in block 20.

A3.28 Block 18g Other Areas. Specify additional evaluation areas that are unique to the
contract, or that cannot be captured elsewhere on the form. More than one type of entry may be
included, but should be separately labeled. If extra space is needed, use Block 20.

A3.28.1 If the contract contains an award fee clause, enter "award fee" in the "Other Areas"
Block (18g). The AO should translate the award fee earned to adjectival ratings which could
prove more useful for using past performance to assess future performance risk in upcoming
source selections. If award fee information is included in the CPAR, use Block 20 to provide a
description for each award fee. Include the scope of the award fee by describing the extent to
which it covers the total range of contract performance activities, or is restricted to certain
elements of the contract.

A3.28.2 If any other type of contract incentive is included in the contract (excluding contract
share incentives on fixed price or cost-type contracts), it should be reported in a manner similar
to the procedures described above for award fee (by entering "Incentive" in Block 18g).

A3.28.3 Use Block 18g in those instances where an aspect of the contractor's performance does
not fit into any of the other blocks on the form.

A3.29 Block 19 N/A. Not applicable.
A3.30 Block 20 Assessing Official Narrative (see Paragraph 1.4). A factual narrative is
required for all assessments regardless of rating. Cross-reference the comments in Block 20 to
their corresponding evaluation area in Block 18. Each narrative statement in support of the area
assessment must contain objective data. An exceptional cost performance assessment could, for
example, cite the current underrun dollar value and estimate at completion. A marginal
assessment could, for example, be supported by information concerning personnel changes or
schedule delinquency rate. Key personnel familiar with the effort may have been replaced by
less experienced personnel. Sources of the data used by the AO for the assessment may include
customer/field surveys or evaluation of contractor reports. The Contracting Officer should be
contacted to ensure that all applicable data has been incorporated. Block 20 comments may be up
to 16,000 characters (approximately three pages) in CPARS.

A3.30.1 The AO must choose the applicable choice to the following statement after Block 20:
“Given what I know today about the contractor’s ability to execute what he promised in his
proposal, I (definitely would not, probably would not, might or might not, probably would or
definitely would) award to him today given that I had a choice.”

A3.31 Block 21 AO Signature. The AO enters his or her name, title, and organization, phone
number (in the following format: (XXX)XXX-XXXX), email address, FAX number, and signs
and dates the form prior to making it available to the contractor for review.

A3.32 Block 22 Contractor Comments. Completed at the option of the contractor. The
contractor’s narrative comments may be up to 16,000 characters (approximately three pages).

A3.33 Block 23 Contractor Representative Signature. The contractor representative
reviewing/commenting on the CPAR will enter his or her name, title, phone number, email
address, FAX number, and signs and dates the form prior to returning it to the AO.

A3.34 Block 24 RO Comments. The RO must acknowledge consideration of any significant
discrepancies between the AO assessment and the contractor's comments. The RO’s narrative
comments may be up to 16,000 characters (approximately three pages).

A3.35 Block 25 - RO Signature. The RO will enter his or her name, title, organization, phone
number in the following format: (XXX)XXX-XXXX, email address, FAX number, and date
when completing the CPAR.

Attachment 4 CPARS Website Features

 Features of the CPARS website (https://www.cpars.csd.disa.mil) include:

   1. The “production” CPAR system for actual entry of the performance evaluation data;
   2. The “practice” CPAR system. The practice system is a mirror image of the functionality
      of the CPAR system using a separate database of simulated CPAR records. The practice
      system allows users to gain familiarity with the system without actually entering live
      performance evaluation data;
3. A “requirements” page that describes hardware and software required, security access
    levels, security features, how to obtain a user account and technical service support, and
    answers to frequently asked questions.
4. Instructions on Internet Explorer (IE) fixes that may be necessary for FAA access to
    CPARS;
5. A Quality Checklist that tutors users on completing a quality evaluation;
6. Link to reference material;
7. Link to CPARS Training;
8. Access Request forms;
9. Software Release history; and
10. Metrics (updated quarterly).
T3.2.2.3 - Complex and Noncommercial Source Selection


A Establishment of a Qualified Vendors List (QVL)

1 General Revised 10/2010

a. A Qualified Vendors List (QVL) is a list of service or product providers who have had their
products or services examined, tested or evaluated and who have satisfied all applicable
qualification requirements. QVLs are intended as a mechanism to establish a pool of qualified
vendors, any of which FAA would be satisfied with the products delivered or services
performed. Pre-screening vendors allows only those most qualified contractors to perform a
particular service or provide a particular product during a specific period. QVLs are also a way
to streamline repetitive procurements for the same or similar products or services.

b. QVLs are most appropriate when the contracting office can reasonably anticipate recurring or
repetitive requirements for the same or similar supplies or services.

c. When planning a QVL, the procurement team should consider the scope of work to be
performed, e.g., will it apply to only one region or center, or will requirements from several
technical offices be combined. If it is intended that a QVL will apply to more than one region or
center, or more than one technical office, close coordination should be utilized to avoid potential
conflicts.

d. The procurement team should determine the extent of any testing, capability demonstrations,
samples, etc. that may involve an expense. If testing, demonstrations, etc. are necessary, the SIR
should be explicit as to who will bear the cost. The procurement team must secure the necessary
funds to accomplish these activities if FAA is to bear the costs.


2 Public Announcement Revised 6/2006

If the total amount of potential procurements under the QVL are anticipated to exceed $100,000,
the CO must make a public announcement. In addition, all potential procurements of products
available from Federal Prison Industries that are anticipated to exceed $10,000 must follow the
public announcement provisions in AMS 3.2.1.3.12. If it is anticipated that a planned QVL will
not exceed $100,000 over its anticipated life and public announcement is not otherwise required,
the CO should ensure wide dissemination of the announcement. Selecting from a wide vendor
base will improve the chances of obtaining quality vendors.


3 Screening and Evaluation Revised 10/2010

a. Screening and evaluation procedures should be according to AMS Policy Section 3.
b. The CO, in conjunction with the procurement team, should formulate appropriate evaluation
criteria for screening and qualifying vendors. The procurement team should carefully craft
evaluation criteria to focus on key discriminators. Evaluation criteria should be tailored to the
particular requirement. The procurement team should develop an evaluation plan describing how
vendors will be evaluated and against what criteria.

c. The screening information request (SIR) should indicate:

       (1) A QVL is being established;

       (2) Types of products or services anticipated to be solicited and awarded;

       (3) Criteria vendors must meet to qualify for the QVL;

       (4) Information prospective vendors must submit (including the submission due date);

       (5) Duration of the QVL;

       (6) A brief explanation of the award process for procurements once the QVL has been
       established, including any method for eliminating firms from the QVL for repeatedly
       failing to respond to SIRs;

       (7) Method for selecting vendors to compete for a specific requirement once the QVL is
       established;

       (8) Method for updating the QVL, including any method for requiring vendors to re-
       qualify for the QVL;

       (9) Method for canceling the QVL; and

       (10) Geographical area limitations, if appropriate.


4 Evaluating Prospective Vendors Revised 10/2010

a. The CO should prepare an evaluation plan. Evaluators must follow the plan and criteria, and
provide a thorough evaluation of those vendors expressing an interest.

b. The number of vendors on a QVL should be appropriate for the types of requirements being
purchased. QVLs need not be so large as to be unmanageable, e.g., there may be many qualified
vendors for routine services. This is why evaluation criteria (including past performance) should
focus on factors that will distinguish average vendors from highly qualified vendors.

c. The QVL should ensure competition, but need only include the best qualified vendors.
5 Notifying Vendors Excluded from a QVL Revised 10/2010

a. The CO should notify vendors who were unsuccessful in qualifying for a QVL as soon as the
decision is made on their individual submission, but no later than the issuance of the QVL. A
debriefing should be provided, if requested, in accordance with AMS Policy Section 3.

b. A public announcement is recommended upon establishing a QVL.


6 Competing Requirements Among Vendors on QVL

a. Vendors should be informed in the initial SIR establishing the QVL of the method of selection
for competing for planned procurements under the QVL. The CO has discretion to tailor the
method of QVL vendor competition to the planned requirements or to the size and nature of the
QVL. For example, it may be appropriate to rotate every five vendors for a QVL with a large
number of vendors, or for another QVL, to reserve certain dollar value procurements for small
business vendors. Whatever the method used, vendors should fully understand the process before
any requirements are competed under the QVL. If complexity or estimated dollar value will be
used for selecting vendors to compete, the QVL participants must be able to specifically state in
their qualification submissions the type, size, and dollar ranges they wish to be considered for.
Also, once the CO establishes a method of competing requirements, it must be used for all
procurements under that particular QVL.

b. Examples of methods to rotate requirements could include: selecting a predetermined number
of vendors for each requirement, using computer-generated random selection, dollar value of
requirements, geographic area of performance, or business size.

c. There must be adequate competition for procurements under a QVL. The incumbent contractor
should always be permitted to compete for any follow-on requirement solicited under the QVL,
unless otherwise precluded from competing under follow-on competition by a specific
Organizational Conflict of Interest provision or documented poor past performance.

d. The procedures for soliciting vendors may be any of the procurement methods established in
the AMS. Public announcement of procurements under the QVL is not required.

e. Once a vendor has been selected to be included on the QVL, generally only prices need to be
requested and evaluated for a specific requirement. Therefore, the CO must ensure that the
decision to select certain vendors to compete is not solely based on the need to minimize the
number of offerors or to save evaluation time.


7 Updating a QVL Revised 10/2010

a. The CO should update QVLs on a periodic basis to allow new vendors an opportunity to
qualify. There is no prescribed time when a QVL should be updated because every QVL will be
different. Factors such as volume of procurements, size of the industry for the products or
services, time and effort involved in establishing a new QVL will influence how often a QVL is
updated.

b. At the stated time for updating a QVL, the CO should request a written confirmation of each
vendor's desire to remain on the QVL. Any vendor not responding to the request for
confirmation may be deleted as an indication of lack of interest. Vendors may request to
withdraw at any time by submitting a written request to the CO.

c. If at any time, a vendor on an established QVL has performance difficulties, changes
ownership, or otherwise becomes less than highly qualified, the CO may request that vendor re-
qualify by submitting qualification information again. The CO should notify the vendor of the
reasons it is being required to re-qualify.


8 Cancelling a QVL Revised 10/2010

There may be situations when a QVL becomes underutilized, e.g. changes in requirements,
budget constraints, lack of vendor participation, etc.. In these cases, the CO should consider
canceling the QVL. When canceling a QVL, the CO should notify all vendors in writing and
provide a brief explanation of the reasons and whether there are any plans to replace or combine
the QVL requirements with other requirements.


9 Availability of Information

Names of firms on an established QVL should be provided to the public upon request. Potential
subcontractors may wish to pursue opportunities which may exist for future projects. Also, the
CO should consider sharing the information with other FAA offices. General information such as
the nature of the QVL, vendor names, duration of the QVL, and a point of contact for further
information could be distributed or posted on the Internet.


10 QVL for Products Revised 10/2010

Products must meet specification requirements. Simply because a product or service appears on a
QVL does not constitute endorsement of the product, manufacturer, or other source by FAA. The
listing of a product or source does not release the supplier from compliance with the
specification. However, it must not be stated or implied that a particular product or source is the
only product or source of that type qualified, or that FAA in any way recommends or endorses
the products or the sources listed. Reexamining a qualified product or manufacturer is necessary
when: the manufacturer has modified its product, or changed the material or the processing
sufficiently so that the validity of a previous qualification is questionable; the requirements in the
specification have been amended or revised sufficiently to affect the character of the product; or
it is otherwise necessary to determine that the quality of the product is maintained in
conformance with the specification.
B Clauses

view contract clauses


C Forms

view procurement forms
T3.2.2.4 - Single Source Added 10/2006


A Single Source Contracting Added 10/2006

1 Basis for Single Source Revised 7/2011

(a) Single source procurement may be used when in the FAA’s best interest. A factual,
reasoned, and well-documented rationale must support the decision to use a single source.
Excluding emergencies, there are no predetermined or prescribed conditions for using a single
source. Each single source decision stands alone and is based on the circumstances.

(b) The rational basis for a single source decision must be documented by the program official,
reviewed by legal counsel, and approved by the Contracting Officer (CO). This rationale is
documented in a:

        (1) Stand-alone, single source justification using the template in Appendix 1;

        (2) Procurement Plan, if a formal plan is established; or

        (3) Implementation Strategy and Planning Document, if applicable.

(c) Approval of Implementation Strategy and Planning Document or approval of a Procurement
Plan constitutes approval of a single-source procurement; no further approval or documentation
is necessary.

(d) For single source procurements with a total value $10,000 or less, a justification is not
required.

(e) Single source justification is not required for noncompetitive set-asides to 8(a)-certified
Socially and Economically Disadvantaged Business (SEDB) or Service Disabled Veteran Owned
Small Business. (See AMS Procurement Guidance T3.6.1 "Small Business Development
Program").


2 Market Analysis Supporting Single Source Revised 1/2010

(a) Market analysis provides factual data to form conclusions and verify assumptions that FAA’s
technical and business interests are best served through a single source. For single source
procurements (excluding emergencies) over $10,000, market analysis is required. The method
and extent of the analysis depends on the requirement, complexity, and estimated dollar value.
(See AMS Procurement Guidance T3.2.1.2 "Market Analysis" for further information.)

(b) A formal market survey is one method to gather current data to support a single source
decision. When used, a formal market survey should include a sufficiently detailed description
of key technical performance requirements or essential knowledge, expertise, or experience so
that potential vendors can determine whether they have the capability to satisfy FAA’s
requirements. FAA also uses these key performance requirements to evaluate capabilities of any
vendors responding to the market survey. The market survey should include explicit
instructions to potential vendors about the acceptable format, form, and level of detail for vendor
capability statements or other vendor information that FAA will use to decide whether other
capable vendors exist and whether a competitive procurement is appropriate.


3 Award of Single Source Revised 4/2009

(a) After approval of the single source justification, the CO may negotiate final contract terms
and price or cost with the single source vendor and award the procurement action.

(b) When the total estimated value is over $100,000, the CO must issue a preaward public
announcement (excluding emergencies) summarizing the basis for the single source decision.
The CO may make a post award announcement to promote potential subcontracting
opportunities. (Also see AMS Procurement Guidance T3.13.1 "Other Administrative
Procedures" for information about notifications to FAA management and Congress).


B Clauses Added 10/2006

view contract clauses


C Forms Added 10/2006

view procurement forms


D Appendix Added 10/2006

                                          APPENDIX 1

                     TEMPLATE FOR SINGLE SOURCE JUSTIFICATION

1. Title of Procurement

Insert a brief title describing the requirement. Include the procurement request number,
solicitation or contract number, if applicable.

2. Program Office and Point of Contact

State the title of the requiring organization, and name, email, and phone number of the
responsible program official.
3. Nature of Procurement Action

State the nature of the procurement action, such as new contract award, follow-on contract to an
existing contract, or modification expanding scope of an existing task order. Identify the
proposed type(s) of contract. If an urgent requirement, state the date by which the procurement
action must be awarded.

4. Total Estimated Value

State the total estimated value, including any options, ceiling amounts, and maximum order
amounts. If optional quantities or performance periods are included, separately show the value
of each (and include the amounts in the total estimated value).

5. Description of Supplies/Services

Describe the requirement for supplies or services to be acquired, deliverables and outcomes of
the work, the intended use, and any unique requirements. Include total quantities and
performance periods (the description of requirements may be broad enough to allow for quantity
increases should the contract unit prices be lower than originally estimated or additional
requirements become known). Detailed specifications or equipment lists should not be included.
When possible, explain the requirement in non-technical terms.

If the requirement will result in a modification to an existing contract, distinguish clearly
between work covered by the basic contract and the additional work to be obtained by the
proposed modification.

Discuss any relevant background, history, events, or other special circumstances related to the
requirement.

6. Authority

Authority for single source procurement is provided by AMS policy section 3.2.2.4. Cite any
other authority if applicable, such as an international agreement.

7. Rationale Supporting Use of a Single Source

Discuss why it is in the FAA’s best interest to use a single source. Provide a well-reasoned,
detailed, and factual explanation. Conclusions about a single source, such as the vendor is the
only known source, or no other vendor can satisfy the requirement within needed timeframe, or
savings from competition will not recover sunk costs, must be supported by objective, factual
information collected through market analysis.

Identify the proposed single source contractor. Include a detailed discussion of the contractor's
unique qualifications, experience, past performance, expertise, specialized products or services,
proprietary data, or other capabilities. Link the contractor’s capabilities to FAA’s requirements.
Describe technical benefits and potential cost savings that would result from using a single
source versus benefits of conducting a competitive procurement that might result in another
vendor performing the work.

Address other factors as applicable, such as:

Impact. Fully describe any impact to the mission of the requiring organization if the single
source product or service could not be provided. Explain why the impact cannot be tolerated.
Give factual examples about the nature, likelihood, and severity of impact. Include cost
estimates and other factual data about the impact, as appropriate.

Specialized Expertise. Explain why a particular expertise, experience, or skill is critical. Discuss
why the single source vendor is the only source that has the specialized expertise. Explain why
other FAA contractors providing or supporting NAS products and services do not have the
required expertise. Describe the impact of not using the single source in terms of feasibility,
time, and cost of another vendor obtaining sufficient expertise.

Follow-on Contracts. If a follow-on procurement for development, production, or sustainment,
discuss any duplication of cost not expected to be recovered through competition or unacceptable
delays in fulfilling requirements. Include data to support conclusions such as an estimates of
costs that would be duplicated or length of delays for transition to another contractor, and basis
for the estimates.

Standardization. If a follow-on contract is to standardize on one vendor’s product or service,
discuss duplication of costs not expected to be recovered through competition or unacceptable
delays in terms of the overall lifecycle of a product or service. Discuss duplicated costs and
learning curves in areas such as testing, familiarization, and certification; physical integration
and interoperability; configuration management; security certifications; controller and other
workforce training; integrated logistics support; maintenance, repair, and other depot or
operational engineering support; maintenance infrastructure; airspace design and procedural
changes; and flight inspections. Include factual examples and data to support conclusions.

Interim Contracts. If the requirement is for an interim contract or contract extension because of
urgent or unusual circumstances, include a complete explanation for extended period of
performance. Discuss why it would be neither cost effective nor realistic for another contractor
to perform during the interim period. Explain issues such as transition plans, start up costs,
staffing and recruitment, transfer of property and equipment, retooling, and learning curves for
the complexity and variety of requirements. Provide factual examples of transition issues,
estimated times, and estimated duplication of costs if a different vendor were awarded an interim
contract.

External Mandate. If the requirement was mandated externally, discuss who imposed the
requirement, how it was communicated, authority to direct the procurement action, and why
single source is the best means of satisfying the mandated requirement. Attach a copy of any
relevant documentation describing the external mandate.
Time Constraints. If time is a key factor, identify when the requirement first became known,
explain the significance of meeting the time constraint, and criticality of time to the
organization's mission. Define quantitatively the impact of not meeting the time constraint, and
why there is insufficient time to conduct a competitive procurement. Discuss cost and time to
conduct a competitive procurement, transition time from one contractor to another, and whether
it could be done within the time limitations.

Patents, Proprietary Data, and Unique Items. Discuss any constraints such as patents,
proprietary data, copyrights or other such limitations. Explain whether the vendor will provide
any data, specifications, drawings, or source code to the FAA. Discuss whether individual
components of a proprietary item can be competitively acquired from other vendors. Discuss
whether the item could be reverse engineered. Describe estimated cost and time to obtain rights
to data or for FAA to separately develop the proprietary item.

Unsolicited Proposal. If the single source is based on an unsolicited proposal, show that it meets
the criteria for a legitimate unsolicited proposal (independently originated, innovative, and
unique) and discuss benefits of adopting the proposal.

8. Market Analysis

Describe in detail the market analysis conducted to identify other qualified sources. If market
analysis was not conducted, explain the circumstances.

Discuss sources of market data, level of analysis, and conclusions drawn about any other
vendor’s capabilities, products or services.

State whether a formal market survey was issued, when, and for how long the announcement was
open. Include a listing of vendors that expressed written interest in the public announcement.
Describe criteria used to evaluate vendors responding to the market survey, reasons for rejecting
each vendor, person evaluating the responses and when. If no vendors responded to the market
survey, include a statement to that effect.

If a prior market survey is used, discuss when the prior survey was conducted, the results, and
why the information is still current and relevant.

Discuss evaluation of data from any internal market survey conducted.

9. Other Facts Supporting Use of Single Source

Discuss any other factors supporting use of a single source.

Include a statement about future actions to be taken, or not to be taken (e.g., no future similar
requirements are anticipated), to identify alternate or additional vendors for the same or similar
requirements. Discuss any actions to ensure that the prime contractor obtains competition in
subcontracting.
10. Determination of Fair and Reasonable Price/Cost

Describe the methods to be used to determine reasonableness of proposed price or cost, such as
analysis of the contractor’s detailed cost data, DCAA audits, and comparison to the independent
Government cost estimate. If applicable, briefly describe any analyses of the vendor’s proposed
cost, and comparison to cost history for the same or similar requirements.

ENDORSEMENT

I certify that the supporting data under my cognizance that are included in this justification are
accurate and complete to the best of my knowledge and belief.

Name:           ____________________________

Signature:      ____________________________

Organization:   ____________________________

Date:           ____________________________



CONCURRENCE AND APPROVAL

Legal Concurrence

Name:           ____________________________

Signature:      ____________________________

Organization:   ____________________________

Date:           ____________________________



Contracting Officer Approval

Name:           ____________________________

Signature:      ____________________________

Organization:   ____________________________

Date:           ____________________________
T3.2.2.5 - Simplified Purchase Method Revised 7/2009


A Simplified Purchasing

1 Simplified Purchasing Revised 10/2010

a. Scope of Simplified Purchasing. Simplified purchasing covers methods used to obtain
noncomplex products, services, or construction through a contract, purchase order, blanket
purchase agreement, and Federal Supply Schedule order. Simplified purchase methods apply to
noncomplex products, services, or construction that have been sold at established catalog or
market prices or where prices can be determined fair and reasonable (see AMS Policy 3.2.2.5).

b. Simplified Purchasing vs. Complex Source Selection. The complexity of FAA’s requirement
shapes the complexity of the process to solicit, evaluate, and select a vendor. Contracting
methods described in AMS Policy 3.2.2.3, Complex Source Selection, are generally not a time
and cost efficient means for acquiring noncomplex products, services, or construction. There are
exceptions to this consideration, such as when the procurement involves cost-reimbursement
pricing or indefinite-delivery arrangements, both noncomplex and complex work is required, in-
depth evaluation is needed to select the best qualified vendor, or extensive contract terms and
conditions are necessary.

c. Authorized users of the FAA purchase card must use methods described in T3.2.6 when
procuring items; however, Contracting Officers (CO) or others delegated procurement authority
outside of the purchase card program may determine which purchasing method is appropriate,
either Simplified Purchase Method or Complex Source Selection, based on the factors
surrounding each procurement.

d. Funding. All applicable funding requirements detailed in AMS Procurement Guidance T3.3.1
apply to procurement conducted using simplified methods. This includes:

        (1) Compliance with the Anti-Deficiency Act;

        (2) Ensuring sufficient funds are available;

        (3) Ensuring awards made subject to the availability of funds include the appropriate
        AMS Clauses (i.e., AMS Clause 3.3.1-10, Availability of Funds, or AMS Clause 3.3.1-
        11, Availability of Funds for the Next Fiscal Year); and

        (4) Ensuring that severable services crossing fiscal years are awarded using appropriate
        funds, and that the contract period does not exceed one year.

e. Mandatory Sources and Other Requirements. When using simplified purchase methods, COs
or others with procurement authority (to include purchase card holders) must consider the
following requirements:
       (1) Strategic Sourcing Initiatives. This includes the following:

              (a) Strategic Sourcing for the Acquisition of Various Equipment and Supplies
              (SAVES). The SAVES program is a mandatory source for some equipment and
              office supplies (see AMS Procurement Guidance T3.8.6).

              (b) Enterprise software licensing agreements such as Oracle.

       (2) Federal Prison Industries, Inc. (FPI) (also known as UNICOR). For those products
       available through FPI, the procedures detailed in AMS Procurement Guidance T3.8.4,
       Government Sources of Products/Services, must be strictly followed.

       (3) Randolph-Sheppard Act. FAA must first consider the blind in the operation of
       vending facilities. (See AMS Procurement Guidance T3.8.4)

       (4) Javits-Wagner-O'Day Act (JWOD). FAA must first consider items and services
       available through the AbilityOne Program (formerly JWOD) before going to other
       sources. (See AMS Procurement Guidance T3.8.4)

       (5) General Services Administration (GSA) Federal Supply Schedules (FSS). When
       procuring items through a GSA FSS, FAA must follow the procedures detailed under
       AMS Procurement Guidance T3.8.3, Federal Supply Schedules. Note that GSA is not a
       mandatory source for FAA.

       (6) Section 508 Requirements. FAA must procure products and services that comply with
       federal requirements for Section 508 of the Rehabilitation Act. (See AMS Procurement
       Guidance T3.2.2)

       (7) Environmental Requirements. FAA should acquire environmentally preferable,
       energy and water efficient, and recycled content products and services when possible.
       (See AMS Procurement Guidance T3.6.3 for additional information)

       (8) Labor Laws. Depending on the nature of the requirement, FAA must comply
       with applicable labor laws when conducting procurements (i.e. the Davis Bacon Act for
       construction of over $2,000, the Service Contract for applicable services over $2,500, and
       the Walsh-Healey Public Contracts Act for materials, supplies, articles, or equipment
       exceeding $10,000). (See AMS Procurement Guidance T3.6.2 for additional information)

f. Set-asides. Purchases with an anticipated value between $10,000 and $100,000, except those
conducted using a purchase card, are automatically reserved for competition among SEDB (8(a))
vendors, unless the purchaser, with review of the cognizant Small and Small Disadvantaged
Utilization Specialist, determines there is not a reasonable expectation of obtaining quotes or
offers from responsible SEDB 8(a) concerns that are competitive in terms of market prices,
quality, and delivery. More information on set-asides, to include SEDB 8(a) and others, is
available in AMS Procurement Guidance T3.6.1.
g. Competition.

        (1) Over $10,000. Purchases over $10,000 must be competed among two or more
        qualified vendors, unless the proposed action is supported by a single source justification
        or is set-aside under a small business preference program authorizing noncompetitive
        awards.

        (2) Under $10,000. Competition is encouraged, but not mandatory for purchases under
        $10,000. Purchasers should consider the administrative cost of the purchase versus
        potential savings that could result from competition. Purchases under $10,000 on a
        single source basis do not require file documentation justifying the single source
        decision. However, purchasers should use sound business judgment and have a
        documented reasonable basis for any decisions involving purchases.

        (3) Purchasers may obtain competition by reviewing commercial catalog/price lists, or
        by soliciting quotes informally by telephone, email, or fax, or formally through written or
        electronic methods of request for quotation or offer.

h. Solicitation.

        (1) Request for Quotation. A request for quotations (RFQ) may be used to obtain
        information on prices and availability of products and services. An RFQ is generally
        used when the purchaser expects to place an order, but does not wish to bind the vendor
        at the time the quotation is received. All of the terms and conditions to be included in
        any purchase that may result from the RFQ are to be included in the RFQ. An RFQ may
        be either written or oral.

        (2) Request for Offer. A request for offer (RFO) is appropriate when the purchaser needs
        some amount of discussion to clearly communicate needs and to understand products and
        services being offered. The purchaser should discuss all aspects of the RFO, including
        quality, warranty, payment and other significant aspects included in a written RFO. An
        RFO may be used when non-price-related information and evaluation is necessary.

i. Discounts. Quantity discounts are usually offered for purchasing a specific quantity or dollar
value of items at one time, or a specified dollar total over an agreed-upon time period. A trade
discount from the catalog/commercial list price is one that is offered to all customers by a
vendor. This may include promotion of seasonal, new or slow-selling items or special discounts
offered by a manufacturer or dealer. A prompt payment discount is one that is offered by a
vendor for payment by the Government before the date payment is due. Such discounts are not
considered in the evaluation of quotes or offers, but any discount offered is included in the
award. The purchaser should seek discounts when appropriate.

j. Competition- Evaluation and Basis for Award.

        (1) Purchasers must consider all timely and responsive quotations or offers received.
       (2) Requirements solicited on an all-or-none basis specify that prospective vendors must
       furnish all of the requested items to be considered for award. If vendors are informed in
       the request for quotation or offer, the purchaser may consider the lowest cost alternative
       between a single award and multiple awards based on the prices for each item and the
       administrative costs of making multiple awards.

       (3) An award is made to the responsive and responsible vendor offering the best value to
       FAA. Purchasers may evaluate vendors on the basis of lowest priced, technically
       acceptable offer or quote, which will result in the best value to FAA.

       (4) Non-price related evaluation factors, such as past performance, quality, qualifications,
       delivery terms or warranties, may also be evaluated but must be communicated to
       vendors.

k. Price Reasonableness.

       (1) Purchases of $10,000 or less. Purchasers do not need to document price analysis for
       purchases when they find no justifiable reason to question that the price is fair and
       reasonable. The administrative cost of verifying price reasonableness of purchases may
       more than offset potential savings from detecting instances of overpricing. When there
       are doubts about the reasonableness of the price, the purchaser should obtain additional
       quotes or take other action to verify price reasonableness, such as reviewing current
       published price lists, reviewing historical prices for purchases of the same or similar item
       or service, or requesting data from the vendor on sales prices to other customers.

       (2) Purchases Over $10,000. Procurements over $10,000 must be supported by a written
       determination by the purchaser that the price is fair and reasonable. When possible, this
       determination is based on competition. When awards are made without competition or
       when only a single responsive quote or offer is received, the purchaser must use other
       price analysis techniques to determine if the price is reasonable. Price analysis
       techniques that the purchaser may consider, along with the independent Government cost
       estimate, include:

              (a) Comparison of prior pricing for the same or similar items or services in
              comparable quantities;

              (b) Application of rough yardsticks (e.g. dollars per pound or horsepower) to
              highlight significant inconsistencies that warrant additional pricing inquiry;

              (c) Comparison with current published catalog or market prices, similar indexes,
              or discount or rebate arrangements;

              (d) Ascertaining that law or regulation establishes pricing; and

              (e) Other information gained through a market survey.
l. Documenting the Award Decision. Purchasers should have a rational basis for purchasing
decisions. The extent of documentation substantiating purchase decisions depends on the value
and circumstances of the purchase. If the purchase involves an item that is a viable exemption to
an applicable prohibition or restriction (See AMS Procurement Guidance T3.2.2.5.A.4,
Prohibited and Restricted Purchases), then the award decision must, despite the dollar value of
the purchase, document the basis and background for the purchase.

       (1) Purchases of $10,000 or less. Documentation is not required except for awards that,
       without documentation, would appear questionable to a “reasonable person” with market
       knowledge of the products or services being purchased.

       (2) Purchases over $10,000. The purchaser must record prices received, names of
       vendors contacted, and discounts, and other terms quoted by each vendor. If competitive
       quotes or offers were solicited and award was made to other than the lowest priced,
       technically acceptable vendor, the purchaser must document evaluation criteria and
       results, and basis for the award decision.

m. Rotating Awards for Requirements of$10,000 or less. When possible and economically
feasible, purchasers should distribute simplified purchase awards of widely available products
and services among vendors.

n. Requisitioner Role.

       (1) The requisitioner defines the requirement by supplying applicable information or
       documentation to the purchaser that includes, but is not limited to, the following:

               (a) Part numbers;

               (b) Item descriptions;

               (c) Statements of work and specifications;

               (d) Packaging and shipment requirements;

               (e) Inspection and acceptance requirements;

               (f) Funding and any required approvals; and

               (g) Suggested vendors.

       (2) As necessary, the requisitioner may assist the purchaser with evaluation of offered
       products and services.

       (3) As part of market research, requisitioners may contact potential vendors about
       product or services offered, pricing, quality, warranty, delivery terms, and other
        information. Requisitioners should clearly communicate to prospective vendors that the
        contact is for market research purposes only and is not a commitment to purchase.

o. Inspection and Acceptance.

        (1) Acceptance by a FAA representative constitutes acknowledgement that the supplies
        or services received conform to applicable contract or purchase requirements.
        Acceptance is documented using an inspection and acceptance form such as FAA Form
        256, by a commercial shipping document or packing list, or through other means to
        include annotation on the purchase order form.

        (2) Acceptance of the supplies or services is the responsibility of the CO or cardholder.
        This responsibility may be assigned to a program office or center representative.

        (3) Each award must specify the place of acceptance as well as other necessary
        acceptance provisions.


2 Purchase Orders Revised 1/2010

a. Purchase order. A purchase order is a simplified form for ordering supplies or services,
generally issued on a fixed-price basis, at stated prices based upon specified terms and
conditions. Purchase orders must specify the quantity of supplies or scope of services being
ordered and contain a date by which the goods or services must be delivered to FAA.

b. Unpriced purchase orders. An unpriced purchase order is an order for supplies or services
that does not have a price established at the time of its issuance.

        (1) An unpriced purchase order may be appropriate when:

                (a) It is impractical to obtain pricing in advance of issuance of the purchase order;
                or

                (b) The purchase is for repairs to equipment requiring disassembly to determine
                the nature and extent of repairs; the material is available from only one source and
                for which cost cannot be readily established; or the order is for supplies or
                services for which prices are known to be competitive but exact prices are not
                known (e.g. miscellaneous repair parts, maintenance agreements).

        (2) Unpriced purchase orders may be issued by using written purchase orders or through
        various electronic means. A realistic monetary limitation, either for each line item or for
        the total order, should be placed on each unpriced purchase order. The monetary
        limitation becomes an obligation subject to adjustment when the firm price is
        established. The contracting office should follow-up each order to ensure timely
        pricing. The Contracting Officer (CO) or designated representative should review the
        invoice price and, if reasonable, process the invoice for payment.
c. Content. Purchase orders should contain the following information:

       (1) Trade and prompt payment discounts that are offered;

       (2) The quantity of supplies or services ordered;

       (3) Inspection provisions; origin or destination;

       (4) A determinable date by which delivery of supplies or performance of services is
       required; and

       (5) Information should be requested by the preparer of the purchase order as follows:

               (a) Vendor’s SSN or taxpayer identification number (TIN);

               (b) Vendor’s business status as one of the following classifications:

                      (i) Individual/sole proprietorship;

                      (ii) Corporation;

                      (iii) Partnership; or

                      (iv) Other (specify);

       (6) The CO’s signature. Electronic signatures may be used in the production of purchase
       orders by automated methods (see AMS Policy 3.1.9).

d. Clauses. The CO may print on the purchase order form, or include as an attachment, the
clauses they consider to be generally suitable for their purchases. The following forms may be
used for purchase orders:

       (1) Optional form 347, Order for Supplies or Services;

       (2) Optional form 348, Order for Supplies or Services Schedule-Continuation; or

       (3) Other agency generated or contractor provided forms.

e. Procedure. Procurement under a purchase order valued over $10,000 must be competed
among 2 or more qualified vendors, unless the action is supported by a single source justification
(AMS Procurement Guidance T3.2.2.4) or conducted under a small business preference program
authorizing noncompetitive awards (AMS Procurement Guidance T3.6.1).

       (1) Competitive Awards.
       (a) Before issuing a request for quotations (RFQ), the CO should develop a listing
       of potential sources based on the requirement. This list can be derived from
       sources to include, but not limited to:

              (i) Previous vendors utilized in FAA or source lists kept in
              the contracting offices;

              (ii) Qualified vendor lists;

              (iii) The requiring or program office;

              (iii) Central Contractor Registration (CCR); and

              (iv) The Office of Small Business Development.

       (b) All procurements over $100,000 must be publicly announced on the FAA
       Contract Opportunities website or through other means. This requirement does
       not apply to emergency actions, purchases from an established QVL, exercise of
       options, or modifications within the scope of a purchase order.

       (c) Once a list of potential sources is available, the CO should solicit as many
       sources as practicable, but must solicit quotations from at least two or more
       sources. A listing of the vendors to whom the RFQ was distributed, as well as
       any responses or quotes, must be included in the official file.

       (d) Prior to award of the purchase order, the CO must confirm that the vendor is
       not listed in the Excluded Parties List System (EPLS) and has successfully
       registered in Central Contractor Registration (CCR). The CO should document
       this process in the file, which may include simply printing the results from each
       search or including a statement of the checks being completed in a memo to file.

              (i) EPLS: http://www.epls.gov/

              (ii) CCR: https://www.bpn.gov/ccr/

       (e) Vendor Selection. Once a qualified and responsible vendor is selected, the CO
       must support the decision with a written determination that the price is fair and
       reasonable and that the award is in the best interest of FAA. This determination
       must be included in the official file.

       (f) Price Analysis/Reasonableness. See AMS Procurement Guidance T3.2.2.5:1.

(2) Single source awards.
                 (a) The rational basis for a single source decision must be documented by the
                 program official, reviewed by legal counsel, and approved by the CO and
                 included in the official file.

                 (b) There are no predetermined or prescribed conditions for using a single source,
                 and each single source decision stands alone and must be based on the
                 circumstances surrounding each specific need.

                 (c) Single source procurements over $10,000 (excluding emergencies) require
                 market analysis to verify that FAA’s technical and business interests are best met
                 through a single source.

                 (d) A single source justification is not required for noncompetitive set-asides to
                 8(a)-certified Socially and Economically Disadvantaged Business (SEDB) or
                 Service Disabled Veteran Owned Small Business. (See AMS Procurement
                 Guidance T3.6.1).

                 (e) When the total estimated value is over $100,000, the CO must issue a pre-
                 award public announcement (excluding emergencies) summarizing the basis for
                 the single source decision.

                 (f) Additional information regarding single source awards can be found in AMS
                 Procurement Guidance T3.2.2.4.

f. Acceptance.

       (1) A quotation resulting from a RFQ is not an offer, and cannot be accepted by FAA to
       form a binding contract. A contract is formed when the supplier accepts the offer, which
       can be done by:

                 (a) The supplier accepting the purchase order in writing to FAA. The Contracting
                 Officer should require written acceptance of a purchase order when it is desired to
                 consummate a binding contract before the contractor undertakes performance; or

                 (b) The supplier furnishing the supplies or services ordered or by proceeding with
                 the work to the point where substantial performance has occurred.

g. Modification. Each purchase order modification should identify the order it modifies, contain
an appropriate modification number, and identify what authority is being used to modify the
order. The Contracting Officer determines when it is necessary to obtain a contractor’s written
acceptance of a purchase order modification. Purchase orders may be modified by using:

       (1) Standard Form 30, Amendment of Solicitation/Modification of Contract;

       (2) An agency-designed form or an automated format; or
       (3) A purchase order form.

h. Termination. A purchase order may be terminated, and the process to terminate an order
depends on whether the order has been accepted.

       (1) If the purchase order has been accepted in writing by the contractor, the termination
       should be processed in accordance with AMS termination clauses.

       (2) If the purchase order has not been accepted in writing by the contractor, the CO
       should notify the contractor in writing that the purchase order has been canceled and
       request the contractor’s acceptance of the cancellation. If the contractor:

              (i) Accepts the cancellation and does not claim that costs were incurred, no
              further action is required.

              (ii) Does not accept the cancellation or claims that costs were incurred, the CO
              should process the termination in accordance with the termination clauses.

i. Purchase order checklist and Simplified Purchase Summary.

       (1) Any purchase order with an anticipated value of $10,000 or more must include a
       Purchase Order/GSA/FSS Order File Checklist (see Procurement Forms) in the official
       file.

       (2) The CO may choose to use the Simplified Purchase Summary (see Procurement
       Forms) to document actions associated with the award of a purchase order.


3 Blanket Purchase Agreement (BPA) Revised 10/2010

a. A blanket purchase agreement (BPA) is a simplified method of filling anticipated repetitive
needs for products or services by establishing "charge accounts" with qualified vendors. BPAs
may be appropriate when other procurement vehicles such as using a purchase card, purchase
order, or contract are not appropriate or available, and:

       (1) A wide variety of items in a class of supplies or services are required, but the exact
       items, quantity, and delivery requirements are not known in advance and vary;

       (2) FAA offices in given areas do not have or need purchasing authority, but need a
       commercial source for supplies or services;

       (3) Establishing a BPA would avoid writing numerous purchase orders;

       (4) There is no existing source for the same supply or service that FAA must use; these
       sources include:
              (a) Federal Prison Industries, Inc. (UNICOR);

              (b) Randolph-Sheppard Act or Javits-Wagner-O'Day Act (JWOD) programs;

              (c) Strategic Sourcing for the Acquisition of Various Equipment and Supplies
              (SAVES) program;

              (d) National Wireless program; and

              (e) Active contracts containing the "Requirements" clause.

b. A BPA is not a contract. Instead, it is an understanding between FAA and a vendor that allows
FAA to place future orders more quickly by identifying terms and conditions applying to those
orders, a description of the supplies or services to be provided, and methods for issuing and
pricing each order. The FAA is not obligated to place, nor must a vendor accept, any orders.
Either party may cancel a BPA at any time. An enforceable contract exists only when FAA
places an order against the BPA and it is accepted by the vendor.

c. Establishing a BPA.

       (1) After determining a BPA would be advantageous, the Contracting Officer (CO) may
       concurrently establish BPAs for the same type of items or services with more than one
       vendor to provide maximum competition for orders.

       (2) There is no maximum dollar limitation for a BPA; however, each BPA must have a
       total ceiling amount. If the anticipated total value of all orders against a BPA will exceed
       $100,000, then it is subject to public announcement and applicable review requirements,
       including review by legal counsel (as well as review by the Chief Financial Officer
       (CFO) (see AMS Procurement Guidance T3.2.1.4 for applicable standards) and Chief
       Information Officer (CIO) (if information technology resources over $250,000 are
       involved)).

       (3) Only a CO can place an individual order exceeding $100,000.

       (4) Using a BPA does not relieve the CO or authorized users from keeping obligations
       and expenditures within available funds.

       (5) Price reasonableness and competition requirements apply to obtaining needs through
       BPAs. A BPA with one vendor does not justify purchasing from only one source; the
       initial BPA and future orders awarded under the BPA are subject to competition
       requirements. (Refer to AMS Procurement Guidance T3.2.2.4, Single Source).

       (6) BPAs may include Federal Supply Schedule (FSS) contractors utilizing the BPA
       provision in their FSS contract.
      (7) BPAs can be prepared without a Procurement Request (PR), but only after contacting
      vendors to arrange for maximum discounts, documentation requirements for individual
      purchases, periodic billings, and other necessary details.

      (8) Open market purchases are not affected by an existing BPA. The same class of
      supplies or services offered through a BPA may be purchased on the open market, and
      both BPA and non-BPA vendors may be solicited.

d. Mandatory Terms and Conditions. A BPA must include:

      (1) Description of Agreement. A statement that the vendor must furnish products or
      services, described in general terms, if and when requested by the CO, or the authorized
      representative, during a specified period and within a stipulated aggregate amount.

      (2) Extent of Obligation. A statement that the FAA is obligated only to the extent of
      authorized orders actually placed under the BPA.

      (3) Purchase Limitation. A statement specifying the dollar limitation for individual orders
      under the BPA.

      (4) Notice of Individuals Authorized to Purchase under the BPA. The CO will furnish to
      the vendor a list of individuals authorized to purchase under the BPA, identified either by
      title of position or by name of individual, organizational component, and the dollar
      limitation per purchase for each position title or individual.

      (5) Clauses. The BPA must include any prescribed clauses applicable to the dollar
      thresholds of particular orders against the BPA, e.g., Service Contract Act for orders for
      services over $2,500.

      (6) Delivery Tickets. A requirement that all shipments under the BPA, except
      subscriptions and other charges for newspapers, magazines, or other periodicals, will be
      accompanied by delivery tickets or sales slips with the following information as a
      minimum: name of individual who placed the order, name of contractor, BPA number,
      date of purchase, purchase number, itemized list of products or services furnished,
      quantity, unit price and extension of each item, and date of delivery or shipment.

      (7) Invoices. Invoices are to be submitted at least monthly or upon expiration of the BPA
      for all deliveries made during the billing period. Each invoice must:

             (a) Identify the delivery tickets covered in the invoice;

             (b) State the total dollar value of each delivery ticket; and

             (c) Be supported by receipt copies of each delivery ticket.
e. Procurement Request (PR). A PR is not required for each order. Instead, the BPA can be bulk
funded to the ceiling on the first order, and then each subsequent order applied to the BPA until
funds are no longer available. Rather than obtaining a PR for each order, bulk funding is a
process where the CO receives authorization through a PR to obligate funds against a specified
lump sum of funds reserved for a specific purpose for a specified period of time. The amount
of bulk funding should represent the anticipated need through the BPA, and not serve as means
to avoid fiscal restrictions or appropriation law. The CO, or authorized BPA user, may make
purchases based on an oral request or a memorandum from an authorized requisitioner in the
program/requisitioning office. The program/requisitioning office should confirm oral requests in
writing as a matter of record.

f. Authorized Users. Each person authorized to place orders against a BPA should receive
written guidance from the CO on the limitations of authority and responsibilities associated with
using the BPA. Authorized users must follow ordering procedures to ensure proper delivery,
billing, and payment. Purchases that would normally be made as single order should not be split
to avoid any user ordering limitations. Program/requisitioning offices should notify the CO
whenever an authorized user changes or the need for purchasing against the BPA no longer
exists; the CO should modify the BPA to reflect any changes in authorized users.

g. Placing an Order.

       (1) When placing an order, the authorized user contacts the vendor and provides:

               (a) Authorized user's name, phone number, and office.

               (b) BPA number and order number assigned by the authorized user.

               (c) Description of required supply or service (part number, description, quantity,
               etc.).

               (d) Delivery address and telephone number.

               (e) Delivery date.

               (f) Reminder that the order is tax exempt.

       (2) The authorized user should request any offered discounts, and inform the vendor that
       the BPA number and order number is to appear on the packing slip and invoice/billing
       statement.

       (3) The authorized user should document the order in a log or by other means to record
       details of the transaction (item description, price, quantity, date, etc.).

h. Segregation of Duties. In accordance with Office of Management and Budget (OMB) Circular
A-123, the same person may not make the purchase, receive supplies or services, and authorize
payment. The same person may perform two of the functions, but not all three.
i. Review. The CO should review a sufficient random sample of BPA files at least annually to
ensure that authorized users are following procedures.

j. Unauthorized Commitments. Only COs or people authorized by the CO may place orders
against a BPA. Any purchase made by an unauthorized person, or any purchase placed against a
BPA which exceeds the authorized limitation is an unauthorized commitment.

k. Market Analysis. The CO must maintain awareness in market conditions, sources of supply,
and other factors that may warrant making new arrangements with different vendors or
modifying existing arrangements.

l. Expiration. A BPA is considered complete when purchases under it equal its total dollar
limitation or when the stated time period expires.


4 Prohibited and Restricted Purchases Revised 7/2011

a. This guidance is intended to assist FAA personnel in determining whether a particular item or
service would be a permissible purchase using appropriated funds. There is no ironclad rule or
readily available list that describes in every case whether a particular purchase using
appropriated funding is permissible. FAA personnel should use common sense and sound
judgment, based on appropriations law and related decisions of the Comptroller General.

b. The Government Accountability Office (GAO) established a "necessary expense" doctrine.
This doctrine is described fully in Volume I, Third Edition, of "Principles of Federal
Appropriations Law," (GAO Red Book) issued by GAO, Office of the General Counsel. This
publication states, in part, that for an expenditure to be justified under the necessary expense
theory, it must meet certain tests, including: "The expenditure must bear a logical relationship to
the appropriation sought to be charged. In other words, it must make a direct contribution to
carrying out either a specific appropriation or an authorized agency function for which more
general appropriations are available" (GAO Red Book, Volume I, Chapter 4, Section B.1.). By
projection, the necessary expense doctrine does not allow use of appropriated funds to purchase
items or services that can be reasonably interpreted to meet personal convenience and are not for
a necessary Governmental function. The CO or purchase cardholder, consulting with budget
officials and legal counsel, should make determinations in this area about questioned or
questionable items or services. Almost any listing of prohibited items of purchase is subject to
exceptions. To quote the GAO Red Book "The Comptroller General has never established a
precise formula for determining the application of the necessary expense rule. In view of the
vast differences among agencies, any formula would almost certainly be unworkable. Rather,
the determination must be made essentially on a case-by-case basis."

c. Prohibited and Restricted Items. For FAA, the following are prohibited or restricted items of
purchase (this is not a complete list):

       (1) Drinking water, except when:
       (a) A duly constituted public health authority pronounces ordinary
       drinking water to be unsafe for human consumption at the site;

       (b) A viable and safe water source for FAA personnel is not
       available on or within a reasonable distance of the worksite;

       (c) FAA personnel reasonably foresee a disaster or emergency,
       such as imminent landfall of a hurricane, and all of the following
       conditions are present:

               (i) FAA personnel reasonably anticipate that
               drinking water at the site will be unsafe for human
               consumption;

               (ii) The drinking water is for FAA personnel
               responding to or at the emergency or disaster site;

               (iii) The amount of drinking water is commensurate
               with the anticipated response time at the site or the
               estimated time for the local drinking water to be
               considered safe for human consumption, whichever
               is shorter; and

               (iv) The drinking water is purchased in a reasonable
               time-frame in advance of an imminent emergency
               or disaster, and the time-frame does not exceed the
               time required to purchase, stage, and properly
               distribute the drinking water; or

       (d) The drinking water is provided in a controlled environment as
       may be necessary to enable collections for drug use analysis for
       safety sensitive positions.

(2) Food or beverage, except as described in AMS Procurement Guidance
T3.2.2.5A.5, FAA Sponsored Conferences, Seminars, Ceremonies, and
Workshops.

(3) Gifts, gift certificates, and prepaid gift cards.

(4) Membership fees for individual employees. The FAA may purchase
membership in a society or association in its own name.

(5) Subscriptions to print or online publications or magazines not related to
official duties.

(6) Clothing or personal apparel of any description, except:
       (a) Special type clothing required by FAA. The requestor’s
       supervisor must prepare a written justification for special type
       clothing and coordinate the justification with legal counsel.

               (i) Clothing (such as a shirt with FAA logo) for recruitment
               activities such as job fairs and professional liaison activities
               with recruitment sources (e.g., schools, colleges and
               universities, professional associations/organizations, or
               intergovernmental agency sources) may be authorized if it
               supports FAA business objectives and there is a bona fide
               need.

               (ii) Clothing for air shows may be authorized if there is a
               bona fide need for FAA employees to be clearly
               identifiable.

       (b) Clothing and equipment classified as personal protective
       equipment (PPE). The requestor’s supervisor must prepare a
       written justification for PPE, but does not need coordination with
       legal counsel when the value of the procurement is below
       $100,000. All PPE must:

               (i) Have proper controls established to ensure that
               PPE is appropriate and accounted for; and

               (ii) Be maintained and used according to standards
               established by the Occupational Safety and Health
               Administration (OSHA). More information is
               online at:
               www.osha.gov/SLTC/personalprotectiveequipment/
               index.html

       (c) All clothing or PPE purchased by FAA remains the property of the
       Government and not the employee.

(7) Rental of aircraft by anyone not in an aircraft-related position.

(8) Fans, air conditioning and cooling equipment, space heaters and heating
equipment, except as properly installed for general use in connection with the
maintenance and operations requirements for the site.

(9) Water coolers, vacuum cleaners, and other household appliances (i.e.
refrigerators, microwaves, etc.), except as requisitioned for general use by the
authorities responsible for building maintenance and equipment.
(10) Cellular or communication devices and services covered by the National
Wireless Program Office (NWPO). Devices provided through the NWPO include
cellular phones, one and two-way pager devices, multi-functional server-based
devices (e.g. Blackberries), and satellite phones.

(11) Personalized stationery, including paper pads, with the name, position, title,
logo, or office of FAA personnel, except when:

       (a) There is a clear business need approved by the head of the line
       of business or staff office; and

       (b) The requestor notifies Office of Financial Controls (AFC-1) of
       the planned purchase in advance.

(12) Tote bags.

(13) Coffee mugs.

(14) Water bottles.

(15) Leather and other natural hide portfolios, binders, or planners.

(16) Give-away items, including portfolio covers, flash drives, pens, and pencils,
for internal or external marketing of products, services, or programs by FAA, with
the following exception and conditions:

       (a) Purchase of promotional items for recruitment activities, such
       as for job fairs and professional liaison activities with recruitment
       sources (e.g., schools, colleges and universities, professional
       associations/organizations, or intergovernmental agency sources),
       may be authorized when these items support FAA business
       objectives and there is a bona fide need. Where there is a bona
       fide need, the selection of items must meet all of the following
       criteria:

               (1) Has a practical use appropriate for the audience,
               and are business related items, such as pens, rulers,
               calculators, post-it notes, business card holders,
               lanyards or note pads;

               (2) The items cannot be a personal use item, such as
               coffee cups, water bottles, umbrellas, candy or food
               items, or fans;

               (3) Is economically priced and reasonably portable;
               and
              (4) Avoids the perception that taxpayer dollars have
              been frivolously spent.

       (b) Recruitment items must comply with FAA branding order
       1700.6C and display the FAA jobs website (www.faa.gov/jobs).

(17) iPAD and similar equipment and related services, with the following
exceptions and conditions:

       (a) All purchases of iPAD or similar equipment and related
       services must be approved by the Chief Information Officer (CIO)
       of the respective line of business (LOB) or staff office (SO) for use
       in a pilot program.

       (b) iPAD and similar equipment and related services for approved
       purchases may be procured using the FAA purchase card if the
       costs do not exceed established single and monthly purchase limits.

       (c) LOB/SO CIOs are responsible for determining the level of
       acceptable security risk. As such, each LOB/SO must review the
       default device settings and modify accordingly to ensure the
       appropriate level of information assurance.

       (d) Each LOB/SO must maintain an inventory of all iPAD or
       similar equipment.

(18) Purchases for Non-Monetary Awards, except:

       (a) The FAA may purchase plaques, trophies, pins, or similar
       symbolic items for non-monetary awards to officially recognize
       employees. Items purchased for non-monetary awards must not
       exceed $75 per item; purchases for the FAA Corporate Awards and
       Recognition program are not subject to this dollar limit, but should
       be reasonably priced and symbolic items. All official awards must
       comply with HRPM, Performance Management PM-9.2,
       Recognizing Employees. Requisitioning offices must maintain
       appropriate documentation for purchases related to non-monetary
       awards.

       (b) To enhance an official awards ceremony, reasonable and
       nominally priced purchases, such as for decorations and related
       supplies, are permissible.

(19) Business Cards, except:
      (a) The FAA may use appropriated funds to purchase business
      cards for employees if necessary to conduct business and approved
      in advance. Associate/Assistant Administrators, ATO Vice
      Presidents, and Regional Administrators/Center
      Directors determine who in their organization are authorized
      business cards paid for with appropriated funds to conduct FAA
      business. Authority for this determination may be delegated to a
      lower level.

      (b) Business cards purchased with appropriated funds are
      Government property. Employees should exercise good judgment
      and caution when using their cards in situations not directly related
      to conducting FAA business.

      (c) All FAA business cards must comply with branding logo and
      template requirements in FAA Order 1700.6C. More information
      is online at:
      employees.faa.gov/tools_resources/branding_writing/standards_to
      ols/business_cards (FAA only)

      (d) Purchasers must use one of two printing sources when using
      appropriated funds to purchase business cards:

             (1) FAA Aeronautical Center's Media Solutions
             Group; or

             (2) Lighthouse for the Blind, Inc., Seattle, WA
             (pursuant to the mandatory source requirements of
             the Javits-Wagner-O'Day Act). Ordering
             information is online at: http://lighthousestore.org/

(20) Purchasing or Renting Portable Storage Units or Procuring Short-term
Storage Services, with the following exceptions and conditions:

      (a) Before purchasing or renting storage units or procuring storage
      services, a determination must be made that existing storage space
      is not available from other sources within FAA or elsewhere in
      Government. COs or purchase cardholders must coordinate
      storage requirements with a Real Estate Contracting Officer
      (RECO). This coordination is intended to ensure that no in-house
      storage capabilities are available, and no real estate or facility
      factors exist that may affect the procurement, such as applicable
      real estate regulations or unique site requirements.

      (b) Storage units or services for purposes of this guidance are
      limited to portable storage units or containers designed for
temporary (less than six months) on-site use or temporary storage
in a secured centralized storage center owned by the vendor. The
storage units or containers must be classified as personal property
and not affixed or attached in a permanent means to the land (real
property) upon which they may be situated for temporary use. If
the portable storage unit or container is to be placed on land owned
or leased by FAA, the CO or cardholder must ensure FAA has
legally established rights to use the land before staging or storing a
third party item of property (storage unit or container) procured
under a service agreement.

(c) When possible, storage requirements for a construction project
should be incorporated into the statement of work or specification
under the associated construction contract.

(d) Purchase cards cannot be used:

       (1) For purchase, rental, or lease of land or
       buildings;

       (2) To purchase real property, which is defined as
       land, buildings, structures or rights over or under
       the land, or things that are permanently affixed or
       attached to the land such as improvements to make
       it more productive or to make it serve a more
       beneficial end than the land itself; and

       (3) For long-term storage unit rental or services
       (long-term is defined as six months or more), unless
       the purchase card is being used as a payment
       vehicle against a contract or lease signed by a
       CO/RECO and:

               (i) The total cost of rental or
               purchase of storage services does not
               exceed the cardholder’s delegated
               authority;

               (ii) The portable units are not
               classified as real property (as defined
               above); and

               (iii) The terms and conditions of the
               rental or storage services (i.e.
               termination authority) are set forth in
               writing and signed by both parties.
5 FAA Sponsored Conferences, Seminars, Ceremonies, and Workshops Revised 10/2010

a. FAA-sponsored conferences, seminars, ceremonies, and workshops are a routine element
of FAA operations. FAA personnel must consider certain special requirements when planning
and conducting such events.

b. Office of Financial Controls Oversight Coordination.

       (1) Conferences sponsored by FAA with an estimated expenditure of $100,000 or
       more, when the travel costs FAA will pay in support of the conference are included,
       require Chief Financial Officer (CFO) and Administrator review and
       approval. Guidance for conferences is at:

       https://intranet.faa.gov/faaemployees/org/staffoffices/aba/oversight/ (FAA only)

       (2) Conferences sponsored by the FAA with an estimated expenditure of less than
       $100,000, and 20 or more FAA employees meeting outside of their normal duty
       stations, require FAA Chief of Staff review and approval.

       (3) A copy of the written justification and the approvals must be sent to the FAA CFO
       at least 30 days prior to the conference.

c. Securing Conference Space. See AMS Real Estate Guidance 2.4.6, Appendix F, for
information on short-term conference and meeting space.

d. Legal Review. Legal counsel must first review any agreement in excess of $100,000
(total Government expenditures including room charges for the attendees) between FAA
and a hotel. Except as provided below, agreements below $100,000 do not require review,
but review may be sought at the discretion of the CO or the CO’s delegee.

       (1) Changes to the following AMS clauses require legal review regardless of
       the dollar value:

              (a) 3.9.1-1 Contract Disputes; and

              (b) 3.10.6-1 Termination for Convenience of the Government
              (Fixed Price).

       (2) Incorporation of the following clauses requires legal review regardless of
       the dollar value:

              (a) Clauses making any law (including state law) other than
              Federal law controlling;

              (b) Clauses that establish liability beyond what is funded or
              contingent liability beyond the limits imposed allowed the
              Federal Tort Claims Act; and

              (c) Clauses requiring binding arbitration.
e. Travel-related Costs. Employee’s travel, hotel, local transportation, and per diem must
be paid with the FAA travel card. An employee’s travel-related costs cannot be paid for
under a contract, purchase order, or FAA purchase card.

f. Items for Distribution to Conference Attendees. Generally, personal use items, such as
mugs, clothing, or bags, cannot be purchased and given to conference
attendees. Conference planners must consult with legal counsel before purchasing any
items to be distributed to conference or event attendees.

g. Food and Beverage.

       (1) The FAA may purchase food and beverage for conference participants
       under the following narrowly defined circumstances:

              (a) Formal Conferences.

                     (i) The term "formal conference" usually denotes
                     topical matters of interest to and participation of
                     multiple agencies and/or non-Governmental
                     participants. Other indicators are registration, published
                     substantive agenda, scheduled speakers and discussion
                     panels.

                     (ii) The meals, beverages, and refreshments must be
                     incidental to the conference.

                     (iii) Attendance at the meals and attendance when the
                     refreshments are provided must be important for FAA to
                     ensure full participation in essential discussions,
                     lectures, or speeches concerning the purpose of the
                     conference.

                     (iv) The meals, beverages, and refreshments must be
                     part of a formal conference that includes both
                     substantial functions at the time the meals, beverages
                     and refreshments are served and substantial functions
                     separate from when food, beverages, or refreshments
                     are served.

                     (v) At formal conferences where the above criteria are
                     met, FAA may also pay for the food, beverages, and
                     refreshments of private citizens or Federal employees
                     from other agencies when an administrative
                     determination is made that their attendance is
                     necessary to achieve the program or conference
                     objectives.

              (b) Internal FAA Training Conferences. The meals, beverages,
              and refreshments must be:

                     (i)   Incidental to the conference;
                    (ii) Attendance at the meals must be necessary for full
                    participation in the conference; and

                    (iii) The employees and members are not free to take
                    meals elsewhere without being absent from the essential
                    business of the meeting.

             (c) Award Ceremonies. The FAA may purchase light
             refreshments for award ceremonies. The FAA purchase
             card may be used to purchase light refreshments.

             (d) Cultural Awareness Ceremonies. FAA may purchase food or
             beverage if part of a formal program intended to both advance
             Equal Employment Opportunity objectives and provide cultural
             or ethnic awareness. Food and beverage must be part of a
             culture’s food and beverage and offered as part of a larger
             program that serves an educational function.

             (e) Official Receptions. For official receptions hosted by the
             Administrator (or designated senior executive) for foreign or
             non-Federal dignitaries, FAA may purchase light refreshments,
             meals, snacks, and beverage. The Administrator’s official
             reception and representation funds must be used for these
             events (see FAA Order 1200.3). The FAA purchase card may
             be used to purchase food or beverage for these events.

      (2) Except for FAA award ceremonies and the Administrator's official
      receptions, FAA purchase card cannot be used as a procurement vehicle for
      food and beverage; a purchase order or contract must be used instead.
      However, the purchase card may be used to make payment against a duly
      executed contract signed by a warranted CO.

      (3) Food and beverage costs must be reasonable, must not include alcoholic
      drinks, and cannot be purchased for amusement or social events, such as
      networking sessions or hospitality suites (except hospitality functions at the
      Adminstrator's official receptions).

      (4) The FAA cannot purchase food and beverage for routine meetings to
      discuss day-to-day issues. Examples of routine meetings include those to
      discuss day-to-day operations, to develop business plans to accompany FAA
      goals, or to develop performance targets.

      (5) The FAA may pay a facility rental fee that includes the cost of food
      or beverages provided to FAA employees where the fee is all-inclusive, not
      negotiable and competitively priced to those that do not include food.

h. Justification for Food and Beverage. The FAA's policy is to not use, nor create the
appearance of, Government funds to entertain Federal employees. Before contracting for a
conference or event with food and beverage, the Director (or equivalent management level)
of the organization sponsoring the event and legal counsel must approve a written
justification explaining why food and beverage is necessary. The justification must
describe:

       (1) Nature and purpose of the event;

       (2) Applicability of the event to FAA’s programs or activities;

       (3) Any statutory, regulatory, or other authority for the event;

       (4) Participants;

       (5) Dates;

       (6) Facility and location;

       (7) Estimated cost; and

       (8) Reason why food and beverage is necessary.

       (9) Meal(s) that will need to be offset in attendees’ travel vouchers; and

       (10) Keynote functions which include meals. The description of the function is
       to include any keynote speakers, the type of presentation(s) being given and
       how they are integral to the conference.

i. Travel Vouchers and Per Diem. Conference attendees must offset in their travel vouchers
the cost of meals paid for and provided by the Government. Light refreshments do not
need to be offset in travel vouchers. Distinguishing meals from light refreshments is
important and sometimes difficult. Foods that constitute light refreshment are snacks, such
as cookies, and beverages. A meal is an occasion in which food is eaten (specifically:
breakfast, lunch or dinner). See FAA Travel Policy for rules when meals are furnished by
the Government.

j. Registration Fees. Registration fees are payments collected by FAA, or a support
contractor on behalf of FAA, from private and other public participants attending an FAA-
sponsored conference. If FAA wishes to charge a registration fee, it must have statutory
authority to do so. Under 31 U.S.C. 3302(b), FAA must deposit registration fees in the U.S.
Treasury, unless there is specific statutory authority for FAA to keep and use fees
collected. The FAA currently has statutory authority to credit back to its operations account
authorized collections; therefore conference planners should check with legal counsel before
depositing authorized registration fees into the general treasury. FAA may not authorize a
conference support contractor to charge a fee to offset costs. However, in cases when FAA
co-sponsors a conference and the co-sponsor incurs the cost of the conference without FAA
reimbursement, the co-sponsor is permitted to collect registration fees to cover its costs.



B Clauses

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C Forms

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D Appendix
T3.2.2.6 - Unsolicited Proposals Revised 10/2008


A Unsolicited Proposals

1 Responsibilities Revised 10/2008

a. Central Point of Contact. The Acquisition Policy Division (AJA-43) is the central point of
contact for unsolicited proposals(UPs), and has overall responsibility for control and tracking of
all UPs in FAA.

b. Designated UP Coordinator. Each office head or service director in Washington headquarters,
Regional Administrators, and Center Directors should designate a person as a contact and
coordinator for UPs. The UP coordinator will receive, track, and forward UPs to the appropriate
office for evaluation and appropriate correspondence.

        (1) For Washington headquarters, AJA-43 is the UP coordinator.

        (2) For Regions and Centers, acquisition offices should designate a UP coordinator (the
        UP coordinator need not be in the acquisition office). Acquisition offices should forward
        to AJA-43 the name, routing symbol, and phone number of the UP coordinator(s) for
        their region or center. The information should be updated whenever a UP coordinator
        changes.

c. UP Evaluator. UP evaluators are individuals who conduct a comprehensive review of UPs to
determine if the ideas offered are innovative and unique, are independently originated, prepared
without FAA supervision, could benefit FAA's mission, and are not an advance proposal for a
known FAA requirement.


2 Content of UP

A UP should contain:

    a. Offeror's name and address;
    b. Names and phone numbers of personnel to be contacted for evaluation and negotiation
       purposes;
    c. Type of organization, e.g., small business, non-profit, etc.;
    d. Concise title and abstract of the proposed effort;
    e. An outline and discussion of the purpose of the proposal and how it relates to the work of
       the FAA, the approach to the problem, and the nature and extent of the anticipated
       results;
    f. Names of key personnel, with brief biographical descriptions, and relevant experience;
    g. Length of time required to perform the work;
    h. Proposed cost, including separate cost estimates for salaries, equipment, and other direct
       or indirect costs;
    i. Name and addresses of any other Government agencies to whom the same or similar
       proposal has been submitted;
    j. Brief description of facilities, particularly those to be used in the proposed effort;
    k. Brief outline of previous work and experiences in the field;
    l. The period of time which the proposal is valid;
    m. Identification of any proprietary data;
    n. Required statements, if applicable, about organizational conflicts of interest, security
       clearances, and environmental impacts; and
    o. Signature of a person authorized to represent and contractually obligate the offeror.


3 Receipt of UP Revised 10/2008

a. Receipt Outside of AJA-43. Often UPs are submitted directly to technical organizations, rather
than to AJA-43. If an unsolicited proposal is received outside of AJA-43, the recipient should
record the date of receipt and immediately send all copies to AJA-43. The recipient must not
read the UP upon receipt, except to read any transmittal document to ascertain that a UP is being
submitted. This safeguard is necessary to prevent any premature disclosure of any information
which may be considered confidential or proprietary by the offeror.

b. UPs Received by Regions and Centers. UPs are sometimes submitted directly to regions and
centers because the nature of the UP pertains only to region or center activities. Region and
center UP coordinators may process these UPs if the subject matter indicates the region or center
should evaluate the UP. The UP recipient should deliver all copies of the UP to the UP
coordinator for the region or center. The UP coordinator will notify AJA-43 by e-mail of receipt
of the UP and the subject matter; AJA-43 will assign a UP number for identification purposes
and inform the region/center of that number. The UP coordinator will promptly send AJA-43 one
copy of the UP and copies of all correspondence to the offeror and evaluating office.

c. UP coordinators for regions and centers will follow the same procedures as AJA-43 for
processing UPs.


4 Procedures Revised 10/2008

a. AJA-43 will process UPs as follows:

    1.   Review each submission received and determine whether it constitutes a valid UP;
    2.   Maintain an appropriate UP record;
    3.   If a valid UP, send the UP to a UP evaluator for review;
    4.   If it is not accepted, return the UP to the offeror advising of FAA policy and procedures
         regarding the treatment of UPs. UPs may be returned if:
           a. It is not related to the FAA mission (when returning the UP, if possible identify
              any other DOT operating administration whose mission may be related to the
              subject matter);
           b. The offeror requests withdrawal of the UP, without an evaluation;
           c. The UP is not accepted for evaluation for any appropriate reason; or
           d. It does not contain a restrictive legend.
    5. Coordinate with the Procurement Legal Division (AGC-500) if any questions arise
       regarding proprietary data.
    6. AJA-43 will retain one copy of the UP and return all remaining copies to the offeror if
       the UP will not be supported.

b. Proprietary Data. UPs may contain unique ideas which involve proprietary data. To safeguard
this data and ensure restricted data is not disclosed, AJA-434 will place a cover sheet on the UP
stating the following: "UNSOLICITED PROPOSAL - USE OF DATA LIMITED. All
Government personnel must exercise extreme care to ensure that information in this proposal is
not disclosed outside the Government and is not duplicated, used, or disclosed in whole or in part
for any purpose other than evaluation of the proposal without the written permission of the
offeror. If a contract is awarded on the basis of this proposal, the terms of the contract must
control disclosure and use. The notice does not limit the Government's right to use information
contained in the proposal if it is obtainable from another source without restriction. This is a
Government notice and will not by itself be construed to impose any liability upon the
Government or Government personnel for disclosure or use of data contained in this proposal."


5 Evaluation Revised 10/2008

a. UP Evaluator Responsibilities.

    1. After receiving a UP from AJA-43, the UP evaluator should promptly perform an initial
       review of the UP to determine whether it has been submitted to the appropriate office. If
       the UP evaluator determines another office should perform the review, then the UP
       evaluator must immediately return the UP to AJA-43 with advice about which office
       should perform the review. The UP evaluator should also identify and coordinate with
       any other organizations that should assist in the evaluation of the UP, and advise AJA-43
       accordingly.
    2. The UP evaluator should ensure a comprehensive evaluation of the UP is completed
       within 30 days after receipt from AJA-43. Coordinating with other offices, if necessary,
       should be factored into the 30 day time period. If the review cannot be completed within
       30 days, the UP evaluator should advise AJA-43 of the reasons for the delay and when
       the evaluation is expected to be completed.
    3. UP evaluators may consider the following when reviewing and deciding whether to
       support a UP:
           a. Unique and innovative methods, approaches or concepts are demonstrated;
           b. Overall scientific, technical, or socio-economic merits of the proposal;
           c. Potential contribution of the effort to the FAA's mission;
            d. The offeror's capabilities, related experience, facilities, techniques or unique
               combinations of these which are integral factors for achieving the proposal
               objectives; and
            e. The qualifications, capabilities, and experience of the proposed principal
               investigator, team leader, or key personnel who are critical to achieving the
               proposal objectives.

b. Once the evaluation is completed, the UP evaluator should advise AJA-431 by memorandum
of the results of the evaluation.

    1. If the proposal will not be supported, that is, the FAA does not intend to award a contract
       based on acceptance of the proposal, the UP evaluator should include with the
       memorandum a draft reply to the offeror, with appropriate comments concerning the
       proposal and the specific reasons why the proposal will not be pursued. The UP evaluator
       should also return all copies of the UP to AJA-43.
    2. If the proposal will be supported, the UP evaluator should submit with the memorandum:
            a. A procurement request for the requirement; and
            b. Written justification to support a recommendation for a single source contract.
            c. If the UP will be supported, it will be the basis for negotiating a contract.


6 Notifying the Offeror Revised 10/2008

a. AJA-43 will provide the following written notifications to offerors:

    1. Acknowledge receipt of the UP from the offeror, and include a UP identification number
       for tracking purposes in the acknowledgment.
    2. Advise the offeror of the status of the proposal if the evaluation is not completed within
       30 days, or is delayed, and the date the evaluation is expected to be completed;
    3. Advise the offeror of the results of the evaluation, using the UP evaluator's draft letter
       and any other data to explain why the proposal will or will not be supported by the FAA.


7 Prohibitions

a. Government personnel must not use any data, concept, idea, or other part of a UP as the basis,
or part of the basis, for a solicitation or in negotiations with any other firm unless the offeror is
notified of and agrees to the intended use. However, this prohibition does not preclude using any
data, concept, or idea available to the Government from other sources without restriction.

b. Government personnel must not disclose restrictively marked information included in a UP.
The disclosure of such information concerning trade secrets, processes, operations, style of work,
apparatus, and other matters, except as authorized by law, may result in criminal penalties under
18 U.S.C. 1905.
B Clauses

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C Forms

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T3.2.2.7 - Contractor Qualifications Revised 1/2009


A Contractor Qualifications

1 Responsibility Determination of Prospective Contractors Revised 4/2008

a. General Standards. A responsible contractor:

        (1) Has or can obtain adequate financial resources to perform a contract;

        (2) Has the ability to meet any required or proposed delivery schedules;

        (3) Has a satisfactory performance history;

        (4) Has a record of integrity and proper business ethics;

        (5) Has appropriate accounting and operational controls that may include, but are not
        limited to:

                (a) Production control;

                (b) Property control systems;

                (c) Quality assurance programs; and

                (d) Appropriate safety programs; and

        (6) Is qualified and eligible to receive an award under applicable laws or regulations.

b. Determination.

        (1) The Contracting Officer's (CO) signature on a contract constitutes a determination
        that a prospective contractor is responsible with respect to that contract.

        (2) The burden of proof is on the prospective contractor to demonstrate its responsibility
        to perform under the terms of the contract.

c. Obtaining Information. When making a determination of responsibility, the CO should have,
or obtain, information sufficient to be satisfied that a prospective contractor currently meets
applicable standards. The CO should apply the following guidelines in collecting
data/information:

        (1) Generally, the CO should obtain information on prospective contractors promptly
        after receipt of offers. Requests for information should ordinarily be limited to
information from those offerors most likely to be considered for award, and may include
requesting preaward surveys. Depending on the circumstances, the CO may obtain this
information before issuing the screening information request (SIR).

       (a) A preaward survey may be useful when the information on hand or readily
       available to the CO is not sufficient to make a determination regarding
       responsibility. When the requirement is for smaller dollar amounts or commercial
       items, the CO should consider the cost of the preaward survey in relationship to
       the requirement.

       (b) Preaward surveys should be managed and conducted by the surveying
       activity. Whether the surveying activity is within or outside of the contract
       administration office, the CO should obtain from the office or auditor:

              (i) Any information required concerning the prospective contractor's
              financial competence and credit needs; and

              (ii) The adequacy of the prospective contractor’s accounting systems and
              the suitability of their use in administering the proposed type of contract.

       (c) When a preaward survey discloses previous unsatisfactory performance, the
       surveying activity should specify the extent to which the prospective contractor
       has taken or plans corrective action. Lack of evidence that past failure to meet
       contractual requirements was the prospective contractor’s fault does not
       necessarily indicate satisfactory performance.

       (d) The surveying activity may provide an abbreviated survey report when it
       possesses information that supports a recommendation of complete award without
       an on-site survey and no special area for investigation has been requested.

       (e) Information on financial resources and performance capability should be
       current as of the date of award.

       (f) The CO’s request to the surveying activity should include:

              (i) Additional factors about which information is needed;

              (ii) The complete SIR package (unless it was previously been furnished),
              and any information indicating prior unsatisfactory performance by the
              prospective contractor;

              (iii) A statement whether the contracting office will participate in the
              survey;
                      (iv) The date by which the report is required. This date should be
                      consistent with the scope of the survey requested and normally should
                      allow at least 7 working days to conduct the survey; and

                      (v) When appropriate, limitations on the scope of the survey.

       (2) In addition to the preaward survey, the CO may use the following sources of
       information to support responsibility determinations:

              (a) Records and experience data, including verifiable knowledge of personnel
              within the contracting office, audit offices, contract administration offices, and
              other contracting offices.

              (b) The prospective contractor, including proposal information, questionnaire
              replies, financial data, information on production equipment, and personnel
              information.

              (c) Other sources such as publications, suppliers, subcontractors, customers of the
              prospective contractor, and financial institutions; or

              (d) If the contract is for construction, the CO may consider performance
              evaluation reports.

       (3) The CO must review the Excluded Parties List System (EPLS) to ensure prospective
       contractors are not listed. (See Notices to GSA and EPLS below).

       (4) Contracting offices and cognizant contract administration offices that become aware
       of circumstances casting doubt on a contractor's ability to perform contracts successfully
       should promptly exchange relevant information.

d. Documentation. The CO should consider the following guidelines for documenting contractor
responsibility determinations:

       (1) A determination of responsibility requires no additional documentation beyond the
       CO’s signature on the contract. Supporting documents such as the preaward survey
       reports, performance records, and related data/information should be included with other
       contract file documentation.

       (2) If a prospective offeror who is otherwise eligible to receive an award is determined to
       be nonresponsible, the CO should insert signed documentation in the contract file
       supporting the nonresponsibility determination. Supporting documentation such as
       preaward survey reports, performance records, and related data/information should also
       be included in the file with the nonresponsibility determination.

       (3) A nonresponsibility determination for a small business is processed in the same
       manner as for large businesses. There is no requirement to coordinate with the Small
       Business Administration (SBA); however the CO may choose to consult with FAA’s
       Office of Small Business Development (OSBD) or local Small Business Development
       staff.


2 Team Arrangements Revised 1/2009

a. General.

       (1) Team arrangements are cooperative arrangements where:

               (a) Two or more companies form a partnership or joint venture to act as a
               potential prime contractor; or

               (b) A potential prime contractor enters into an agreement with one or more other
               companies to have them act as subcontractors under a specific contract.

       (2) Benefits of team arrangements to both FAA and an offeror or contractor include, but
       are not limited to:

               (a) Increases competitive edge and presents a stronger position to FAA;

               (b) Provides companies access to new markets and opportunities;

               (c) Allows companies to collaborate and focus on their core capabilities;

               (d) Brings differing skills and experience together into one solution for FAA;

               (e) More opportunities for small and small disadvantaged businesses; and

               (f) Decreased costs.

       (3) Team arrangements may prove particularly appropriate for research and development
       (R&D) requirements; however they may be used in other types of acquisitions as well.

       (4) FAA will not normally require the dissolution of team arrangements.

       (5) Guidance on determining small business size standards for team arrangements can be
       found in AMS Procurement Guidance T3.6.1.

b. Joint Venture.

       (1) A joint venture is a separate legal entity, such as a partnership or corporation, formed
       by two or more parties to conduct business.

       (2) In a joint venture, each party contributes equity and shares:
               (a) In any revenues;

               (b) Expenses incurred; and

               (c) In the management or control of the venture.

       (3) Joint ventures may be a continuing business relationship or for just one or more
       projects.

c. Disclosure of Team Arrangements. In order for FAA to recognize the validity of a team
arrangement, the arrangement and company relationships must be fully disclosed:

       (1) In the offer; or

       (2) Before the arrangement becomes effective when formed after the submission of an
       offer or contract award.

d. Antitrust Law and FAA Rights.

       (1) All team arrangements must comply with all applicable antitrust statutes.

       (2) Despite any team arrangement, FAA retains the right to:

               (a) Require consent to subcontracts;

               (b) Determine the responsibility of the prime contractor;

               (c) Provide to the prime contractor data rights owned or controlled by the
               Government;

               (d) Hold the prime contractor responsible for contract performance; and

               (e) Apply other AMS requirements such as those for competition or
               subcontracting.


3 Debarment and Suspension Revised 4/2010

a. General.

       (1) Debarment and suspension are discretionary actions that are appropriate means to
       implement FAA policy and should be undertaken only to protect the interest of
       FAA. Contractors debarred, suspended, or proposed for debarment are excluded from
       receiving contracts. FAA will not solicit offers from, award contracts to, consent to
       subcontracts, or conduct business with contractors that are debarred, suspended, or
       proposed for debarment:
       (a) In their individual capacities;

       (b) As agents or representatives of other contractors; or

       (c) As sureties on FAA contracts.

(2) Compelling Exception. The FAA will not conduct business with contractors that are
debarred, suspended, or proposed for debarment, unless the Administrator, or designee,
determines that there is a compelling reason for such action.

(3) Debarring/Suspending Official. The Administrator is both the debarring official and
the suspending official. However, the Administrator may authorize individuals to act as
the debarring or suspending official. The debarring or suspending official is the only
individual with the authority to make debarment or suspension decisions.

(4) Effect on Divisions/Affiliates. Suspension or debarment applies to all divisions or
other organizational elements of the contractor, unless the suspension or debarment
decision is limited by its terms to specific divisions, organizational elements, or
commodities. The debarring and suspending official(s) may also extend the debarment
decision to include any affiliates of the contractor if they are:

       (a) Specifically named;

       (b) Given written notice of the proposed debarment; and

       (c) Given written notice of an opportunity to respond.

(5) Continuation of Current Contracts. Contractors debarred, suspended or proposed for
debarment may continue to perform current contracts or subcontracts, unless the
Administrator or designee determines otherwise. However, FAA should not renew or
extend the current contract period, or consent to subcontracts, with contractors debarred,
suspended, or proposed for debarment unless the Administrator, or designee, determines
that there are compelling reasons for renewal or extension.

(6) Ineligible Based on Statute or Regulation. Contractors declared ineligible on the basis
of statutory or other regulatory procedures are excluded from receiving contracts and, if
applicable, subcontracts under the conditions and for the periods set forth in the statute or
regulation.

(7) Initiating the Debarment/Suspension Action. When the CO, or requisitioner/program
official, determines that cause for debarment or suspension may exist, the information
together with any supporting documentation should be provided to the Assistant Chief
Counsel for the Procurement Legal Division (AGC-500). AGC-500 will appoint a
debarment/suspension officer to investigate whether cause for debarment or suspension
exists. The FAA Acquisition Executive will have oversight responsibility and will
monitor implementation of the debarment and suspension program.
(8) The Administrative Record. The debarment officer will assemble the Administrative
Record, which is a consolidated set of records, information, and documentation that
clearly demonstrates the basis for the debarment or suspension and the events and actions
taken throughout the entire process such as:

       (a) Cause for debarment or suspension;

       (b) Notice of proposal to debar/suspend;

       (c) Contractor’s responses, arguments, disputes;

       (d) Consideration given to contractor’s responses;

       (e) Resolution of contractor’s comments or disputes, etc.;

       (f) Findings of fact;

       (g) Other communications with the contractor;

       (h) Final report and recommendation to the Debarring Official/Suspending
       Official;

       (i) Debarring/Suspension Official determinations;

       (j) Final notice to the contractor/affiliate; and

       (k) Notice to the General Services Administration (GSA) regarding the
       debarment/suspension (see Notices to GSA and EPLS below). The notice should
       include the FAA-accepted acronym "DOT-FAA."

       (l) Within 45 days of proper notification ("proper notification" is defined as: a
       referral from the Office of Inspector General that includes either a copy of the
       Federal, State, or local indictment or civil complaint or other official
       correspondence or documentation evidencing the indictment or civil complaint
       from the Department of Justice/United States Attorney. (Internet sources and
       local newspaper articles as well as unverified news sources are unacceptable for
       documentation)), FAA will either initiate a debarment or suspension proceeding,
       or make a decision that a debarment or suspension is not appropriate. If a
       decision is made not to initiate a debarment or suspension proceeding after proper
       notice is received, then a justification will be made part of the written record
       within 45 days after proper notice.

(9) Scope of Debarment/Suspension.

       (a) Fraudulent, criminal, or other seriously improper conduct of any officer,
       director, shareholder, partner, employee, or other individual associated with a
                contractor may be imputed to the contractor when the conduct occurred in
                connection with the individual's performance of duties for or on behalf of the
                contractor, or with the contractor's knowledge, approval, or acquiescence. The
                contractor's acceptance of the benefits derived from the conduct should be
                considered as evidence of such knowledge, approval, or acquiescence.

                (b) The fraudulent, criminal, or other seriously improper conduct of a contractor
                may be imputed to any officer, director, shareholder, partner, employee, or other
                individual associated with the contractor who participated in, knew of, or had
                reason to know of the contractor's conduct.

                (c) The fraudulent criminal, or other seriously improper, conduct of one
                contractor participating in a joint venture or similar arrangement may be imputed
                to other participating contractors if the conduct occurred for or on behalf of the
                joint venture or similar arrangement, or with the knowledge, approval, or
                acquiescence of these contractors. Acceptance of the benefits derived from the
                conduct must be evidence of such knowledge, approval, or acquiescence.

      (10) Failure to Disclose Violation of Federal Criminal Law. Whether or not AMS
      clause 3.2.5-13 is applicable, a contractor may be suspended and/or debarred for knowing
      failure by a principal to timely disclose to the Government, in connection with award,
      performance, or closeout of a Government contract performed by the contractor or a
      subcontract awarded thereunder, credible evidence of a violation of Federal criminal law
      involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the
      United States Code or a violation of the civil False Claims Act. Knowing failure to
      timely disclose credible evidence of any of the above violations remains a cause for
      suspension and/or debarment until three (3) years after final payment on a contract.

b. Debarment.

      (1) Causes for Debarment. The debarring official should debar a contractor based upon
      the following:

                (a) Conviction of or civil judgment for:

                       (i) Commission of fraud or a criminal offense in connection
                       with obtaining, attempting to obtain, or performing a public contract or
                       subcontract;

                       (ii) Violation of Federal or State antitrust statutes relating to the
                       submission of offers;

                       (iii) Commission of embezzlement, theft, forgery, bribery, falsification or
                       destruction of records, making false statements, tax evasion, violating
                       Federal criminal tax laws, or receiving stolen property;
       (iv) Intentionally affixing a label bearing a "Made in America" inscription
       (or any inscription having the same meaning) to a product sold in or
       shipped to the United States, when the product was not made in the United
       States (see Section 202 of the Defense Production Act (Pub. L. 102-558);
       or

       (v) Commission of any other offense indicating a lack of business integrity
       or business honesty that seriously and directly affects the present
       responsibility of a Government contractor or subcontractor.

(b) A preponderance of the evidence for the following:

       (i) Violation of the terms of a Government contract or subcontract so
       serious as to justify debarment, such as:

              (A) Willful failure to perform in accordance with the terms of one
              or more contracts; or

              (B) A history of failure to perform, or of unsatisfactory
              performance of, one or more contracts.

       (ii) Violations of the Drug-Free Workplace Act of 1988 (Pub. L. 100-690),
       as indicated by:

              (A) Failure to comply with the requirements of AMS Clause 3.6.3-
              16, Drug Free Workplace; or

              (B) Such a number of contractor employees convicted of violations
              of criminal drug statutes occurring in the workplace as to indicate
              that the contractor has failed to make a good faith effort to provide
              a drug-free workplace.

       (iii) Intentionally affixing a label bearing a "Made in America" inscription
       (or any inscription having the same meaning) to a product sold in or
       shipped to the United States, when the product was not made in the United
       States (see Section 202 of the Defense Production Act (Pub. L. 102-558)).

       (iv) Commission of an unfair trade practice as defined herein (see also
       Section 201 of the Defense Production Act (Pub. L. 102-558)).

       (v) Delinquent Federal taxes in an amount that exceeds $3,000.

              (A) Federal taxes are considered delinquent for purposes of this
              provision if both of the following criteria apply:
              (1) The tax liability is finally determined. The liability is finally
              determined if it has been assessed. A liability is not finally
       determined if there is a pending administrative or judicial
       challenge. In the case of a judicial challenge to the liability, the
       liability is not finally determined until all judicial appeal rights
       have been exhausted.
       (2) The taxpayer is delinquent in making payment. A taxpayer is
       delinquent if the taxpayer has failed to pay the tax liability when
       full payment was due and required. A taxpayer is not delinquent in
       cases where enforced collection action is precluded.
       (B) Examples.
       (1) The taxpayer has received a statutory notice of deficiency,
       under I.R.C. §6212, which entitles the taxpayer to seek Tax Court
       review of a proposed tax deficiency. This is not a delinquent tax
       because it is not a final tax liability. Should the taxpayer seek Tax
       Court review, this will not be a final tax liability until the taxpayer
       has exercised all judicial appeal rights.
       (2) The IRS has filed a notice of Federal tax lien with respect to an
       assessed tax liability, and the taxpayer has been issued a notice
       under I.R.C. §6320 entitling the taxpayer to request a hearing with
       the IRS Office of Appeals contesting the lien filing, and to further
       appeal to the Tax Court if the IRS determines to sustain the lien
       filing. In the course of the hearing, the taxpayer is entitled to
       contest the underlying tax liability because the taxpayer has had no
       prior opportunity to contest the liability. This is not a delinquent
       tax because it is not a final tax liability. Should the taxpayer seek
       tax court review, this will not be a final tax liability until the
       taxpayer has exercised all judicial appeal rights.
       (3) The taxpayer has entered into an installment agreement
       pursuant to I.R.C. §6159. The taxpayer is making timely payments
       and is in full compliance with the agreement terms. The taxpayer is
       not delinquent because the taxpayer is not currently required to
       make full payment.
       (4) The taxpayer has filed for bankruptcy protection. The taxpayer
       is not delinquent because enforced collection action is stayed under
       11 U.S.C. 362 (the Bankruptcy Code).

(vi) Knowing failure by the principal, until three (3) years after the final
payment on any FAA contract awarded to the contractor, to timely
disclose to FAA, in connection with the award, performance, or closeout
of the contract or a subcontract thereunder, credible evidence of:

       (A) Violation of Federal criminal law involving fraud, conflict of
       interest, bribery, or gratuity violations found in Title 18 of the
       United States Code;

       (B) Violation of the civil False Claims Act (31 U.S.C. 3729-3733);
       or
                     (C) Significant overpayment(s) on the contract, other than
                     overpayments resulting from contract financing payments.

      (c) A determination by the Attorney General of the United States, or designee,
      that the contractor is not in compliance with Immigration and Nationality Act
      employment provisions (see Executive Order 12989). The Attorney General's
      determination is not reviewable in the debarment proceedings.

      (d) Any other cause of so serious or compelling a nature that it affects the present
      responsibility of a Government contractor or subcontractor.

(2) Debarment Procedure

      (a) Notice Of Proposed Debarment. If after review of the record and any
      additional investigation, the debarring official determines that there is sufficient
      cause for debarment, the debarring official must issue a Notice of Proposed
      Debarment to the contractor and any specifically named affiliates. The notice
      should be mailed by certified mail, return receipt requested, stating that
      debarment is being considered. The notice should also state:

             (i) The specific name the firm and any affiliate being considered for
             debarment;

             (ii) That debarment is being considered;

             (iii) The reasons for the proposed debarment in terms sufficient to put the
             contractor on notice of the conduct or transaction(s) upon which it is
             based;

             (iv) The cause(s) relied upon under Section 3.b, Debarment;

             (v) That within 30 days after receipt of the notice, the contractor may
             submit, in person, in writing, or through a representative, information and
             argument in opposition to the proposed debarment, including any
             additional specific information that raises a genuine dispute over the
             material facts;

             (vi) The FAA’s process for completing the debarment proceeding;

             (vii) The effect of the issuance of the notice of proposed debarment on the
             contractor; and

             (viii) The effect of debarment on the contractor and any affiliates.
(b) Contractor’s Response to the Notice of Proposed Debarment. The contractor’s
response will be reviewed to identify issues that could affect the outcome and
merit further exploration.

(c) Mitigating Factors. The existence of a cause for debarment does not require
that the contractor be debarred. The debarring official may consider the following
mitigating factors, none of which is by itself dispositive, in determining whether
or not to debar a contractor:

       (i) Whether the contractor had effective standards of conduct and internal
       control systems in place at the time of the activity which constitutes cause
       for debarment, or had adopted such procedures prior to any Government
       investigation of the activity cited as a cause for debarment.

       (ii) Whether the contractor brought the activity cited as a cause for
       debarment to the attention of the appropriate Government agency in a
       timely manner.

       (iii) Whether the contractor has fully investigated the circumstances
       surrounding the cause for debarment and, if so, made the result of the
       investigation available to the debarring official.

       (iv) Whether the contractor cooperated fully with Government agencies
       during the investigation and any court or administrative action.

       (v) Whether the contractor has paid or has agreed to pay all criminal,
       civil, and administrative liability for the improper activity, including any
       investigative or administrative costs incurred by the Government, and has
       made or agreed to make full restitution.

       (vi) Whether the contractor has taken appropriate disciplinary action
       against the individuals responsible for the activity which constitutes cause
       for debarment.

       (vii) Whether the contractor has implemented or agreed to implement
       remedial measures, including any identified by the Government.

       (viii) Whether the contractor has instituted or agreed to institute new or
       revised review and control procedures and ethics training programs.

       (ix) Whether the contractor has had adequate time to eliminate the
       circumstances within the contractor's organization that led to the cause for
       debarment.
       (x) Whether the contractor's management recognizes and understands the
       seriousness of the misconduct giving rise to the cause for debarment and
       has implemented programs to prevent recurrence.

(d) Debarring Official’s Decision.

       (i) Actions Based Upon a Conviction or Civil Judgment or Without
       Genuine Dispute Over Material Facts. In this type of action, the debarring
       official will consider the information in the administrative record,
       including any submission made by the contractor. If no suspension is in
       effect, the debarring official should make the decision within 30 working
       days after receipt of any information and argument submitted by the
       contractor, or within a reasonable time thereafter.

       (ii) Actions Not Based Upon a Conviction or Civil Judgment. Where the
       proposed debarment is not based upon a conviction, civil judgment, or
       indictment, or the contractor's response to the Notice of Proposed
       Debarment raises a genuine dispute over facts material to the proposed
       debarment, the debarring official may, upon the request of a contractor:

              (A) Provide the contractor an opportunity to appear informally
              with counsel, submit documentary evidence, present witnesses, and
              confront any person the agency presents; and

              (B) Make a transcribed record of the proceedings and make it
              available at cost to the contractor.

       (iii) Evidentiary Standard for Debarments not Based Upon Conviction or
       Civil Judgment. In any action in which the proposed debarment is not
       based upon a conviction or civil judgment, the cause for debarment must
       be established by a preponderance of the evidence.

       (iv) Demonstrating Responsibility. If a cause for debarment exists, the
       contractor has the burden of demonstrating that, notwithstanding the
       existence of a cause or causes for debarment, the contractor is presently
       responsible to perform Government contracts.

       (v) Period of Debarment.

              (A) The debarring official should consider the facts and determine
              a debarment period commensurate with the seriousness of the
              cause(s) and sufficient to protect the Government’s
              interest. Generally, debarment should not exceed three (3) years,
              except that debarment for violation of the provisions of the Drug-
              Free Workplace Act of 1988 may be for a period not to exceed five
              (5) years. Debarments subject to the Immigration and Nationality
                               Act should not exceed one (1) year and may be extended for
                               additional periods of one (1) year if the Attorney General or
                               designee determines that the contractor continues to be in violation
                               of the employment provisions of the Immigration and Nationality
                               Act. If suspension precedes a debarment, the suspension period
                               should be considered in determining the debarment period.

                               (B) The debarring official should extend the period of debarment if
                               that official determines that extension is necessary to protect the
                               Government. However, a debarment may not be extended solely
                               on the basis on the facts and circumstances upon which the initial
                               debarment action was based.

                 (e) Notice of Debarment to Contractor/Affiliates.

                        (i) The debarring official will provide the contractor and each affiliate
                        identified for debarment/suspension with a Notice of
                        Debarment/Suspension by mailing the notice by certified mail, return
                        receipt requested. The notice will:

                               (A) Refer to the Notice of Proposed Debarment;

                               (B) Specify the reasons for debarment;

                               (C) State the period of suspension/debarment, including effective
                               dates; and

                               (D) Advise that the debarment is effective throughout the
                               executive branch of the Government unless the debarring official
                               determines that there are compelling reasons for FAA to continue
                               to do business with the contractor.

                        (ii) Debarment Not Imposed. If debarment is not imposed, the debarring
                        official will promptly notify the contractor and any affiliates involved, by
                        certified mail, return receipt requested.

c. Suspension.

       (1) Applicability. Suspension is appropriate when the suspending official determines that
       immediate action is necessary to protect the government’s interest pending the
       completion of legal proceedings, or the agency investigation of the improper conduct.

       (2) Causes for Suspension.

                 (a) The suspending official should suspend a contractor as defined herein, upon
                 adequate evidence, of:
(i) Commission of fraud or a criminal offense in connection
with obtaining, attempting to obtain, performing a public contract or
subcontract;

(ii) Violation of Federal or State antitrust statutes relating to the
submission of offers;

(iii) Commission of embezzlement, theft, forgery, bribery, falsification or
destruction of records, making false statements, tax evasion, violating
Federal criminal tax laws, or receiving stolen property;

(iv) Violations of the Drug-Free Workplace Act of 1988 (Pub. L. 100-
690), as indicated by:

        (A) Failure to comply with the requirements of the AMS Clause
        3.6.3-16, "Drug Free Workplace;" or

        (B) Such a number of contractor employees convicted of violations
        of criminal drug statutes occurring in the workplace as to indicate
        that the contractor has failed to make a good faith effort to provide
        a drug-free workplace;

(v) Intentionally affixing a label bearing a "Made in America" inscription
(or any inscription having the same meaning) to a product sold in or
shipped to the United States, when the product was not made in the United
States (see section 202 of the Defense Production Act (Pub. L. 102-558));

(vi) Commission of an unfair trade practice as defined herein (see section
201 of the Defense Production Act (Pub. L. 102-558));

(vii) Delinquent Federal taxes in an amount that exceeds $3,000. See the
criteria at T3.2.2.7.A.3.b.(1)(b)(i)(B)(v) for when taxes are considered
delinquent;

(viii) Knowing failure by the principal, until three (3) years after the final
payment on any FAA contract awarded to the contractor, to timely
disclose to FAA, in connection with the award, performance, or closeout
of the contract or a subcontract thereunder, credible evidence of -

        (A) Violation of Federal criminal law involving fraud, conflict of
        interest, bribery, or gratuity violations found in Title 18 of the
        United States Code;

        (B) Violation of the civil False Claims Act (31 U.S.C. 3729-3733);
                      (C) Significant overpayment(s) on the contract, other than
                      overpayments resulting from contract financing payments; or

              (ix) Commission of any other offense indicating a lack of business
              integrity or business honesty that seriously and directly affects the present
              responsibility of a Government contractor or subcontractor.

       (b) Indictment for any of the causes in paragraph (a) above constitutes adequate
       evidence for suspension.

       (c) The suspending official should upon adequate evidence also suspend a
       contractor for any other cause of so serious or compelling a nature that it affects
       the present responsibility of a Government contractor or subcontractor.

(3) Suspension Procedure.

       (a) Notice of Suspension. If cause for suspension exists, the suspending official
       will issue a notice of suspension to the contractor and any specifically named
       affiliates, if applicable. No hearing is required prior to the imposition of
       suspension. The notice must be sent by certified mail, return receipt requested,
       and must state:

              (i) That the contractor has been suspended and that the suspension is
              based upon an indictment or other adequate evidence that the contractor
              has committed irregularities of a serious nature in business dealings with
              the Government or seriously reflecting on the propriety of further
              Government dealings with the contractor. The irregularities must be
              described in terms sufficient to place the contractor on notice without
              disclosing the Government’s evidence;

              (ii) That the suspension is for a temporary period pending the completion
              of the investigation and such legal proceedings that may ensue;

              (iii) The cause relied on for suspension (see Causes for Suspension);

              (iv) The effect of the suspension on the contractor and affiliates;

              (v) That within thirty (30) days after receipt of the notice, the contractor
              may submit in person, in writing, or through a representative, information
              and argument in opposition to the suspension, including any additional
              information that raises a genuine dispute over material facts; and

              (vi) That additional proceedings may be conducted to determine disputed
              material facts unless:

                      (A) The action is based upon an indictment; or
                      (B) A determination is made, on the basis of Justice Department
                      advice, that the substantial interests in the Government in a
                      pending or contemplated legal proceeding based on the same facts
                      as the suspension would be prejudiced.

       (b) Suspending Official’s Decision.

              (i) In actions that are based on an indictment, in which the contractor’s
              submission does not raise a genuine dispute over material facts, or in
              which the Department of Justice has denied additional proceedings to
              determine disputed facts, the suspending officials decision must be based
              on the administrative record, including any submission made by the
              contractor.

              (ii) In actions not based upon an indictment or actions in which the
              Department of Justice has not denied additional proceedings, the
              suspending official may, upon the contractor’s request, provide the
              contractor an opportunity to appear informally with counsel, submit
              documentary evidence, present witnesses, and confront any person the
              agency presents. At the discretion of the suspending official, a transcribed
              record of the proceedings may be made and made available at cost to the
              contractor upon request.

(4) Other Actions by the Suspending Official.

       (a) Written Findings. The suspending official must make written findings of fact
       and base the decision on the facts as found, together with any information and
       argument submitted by the contractor and any other information in the
       administrative record.

       (b) Suspending Official’s. The suspending official may modify or terminate the
       suspension or leave it in force. However, a decision to modify or terminate a
       suspension does not prevent any other agency from suspending or debarring the
       contractor under the same facts or circumstances.

(5) Period of Suspension.

       (a) Suspensions must be for a temporary period as stated in 3.a. (ii) above unless
       otherwise terminated sooner by the CO. The CO must notify the Department of
       Justice (DOJ) of the proposed termination of the suspension at least 30 days prior
       to the expiration of the initial 12-month period to give DOJ an opportunity to
       request an extension.

       (b) If legal proceedings are not initiated within 12 months after the date of the
       suspension notice, the suspension must be terminated unless an Assistant
       Attorney General requests its extension, in which case it may be extended for
               another 6 months. In no event may a suspension extend beyond 18 months,
               unless legal proceedings have been initiated within that period.

       (6) Notices to Contractor/Affiliates. The suspending official must provide prompt written
       notice of the decision to the contractor and any affiliates involved.


4 Notices to GSA and EPLS Added 4/2008

a. Notice to GSA. The appropriate CO, at the direction of the debarring/suspending official, will
provide GSA the information specified below within 5 working days after a
debarment/suspension is effective:

       (1) The names and addresses of all contractors debarred, suspended, proposed for
       debarment, or declared ineligible in alphabetical order, with cross-references when more
       than one name is involved in a single action;

       (2) The name and official acronym ("DOT-FAA") of the agency or other authority taking
       the action;

       (3) The cause for the action other statutory or regulatory authority;

       (4) The effect of the action;

       (5) The termination date for each listing;

       (6) The DUNS No; and

       (7) The name and telephone number of the point of contract for the action.

b. Excluded Parties List System (EPLS).

       (1) GSA operates the web-based EPLS. The EPLS includes the:

               (a) Names and addresses of all contractors debarred, suspended, proposed for
               debarment, declared ineligible, or excluded or disqualified under the
               nonprocurement common rule, with cross-references when more than one name is
               involved in a single action;

               (b) Name of the agency or other authority taking the action;

               (c) Cause for the action or other statutory or regulatory authority;

               (d) Effect of the action;

               (e) Termination date for each listing;
                (f) DUNS No.;

                (g) Social Security Number (SSN), Employer Identification Number (EIN), or
                other Taxpayer Identification Number (TIN), if available; and

                (h) Name and telephone number of the agency point of contact for the action.

        (2) For information about adding a contractor to the EPLS, the CO should contact the
        DOT representative listed under the agency contacts on the EPLS web page at:
         http://epls.gov.


5 Prohibition Against Contracting with Inverted Domestic Corporations Added 1/2010

(a) To be eligible for a contract award when using Fiscal Year 2006 through Fiscal Year 2010
appropriations, an offeror must represent it is not an inverted domestic corporation or subsidiary
as defined under 6 U.S.C. 395 (b) and (c) and 26 U.S.C. 7874. Any offeror that cannot so
represent is ineligible for contract award using such appropriated funds.

(b) Contracting Officers must rigorously examine known circumstances that would lead a
reasonable business person to question an offeror’s self-certification and, after consultation with
legal counsel, take appropriate action when that questionable self-certification cannot be verified.

(c) Waiver. The FAA Administrator may waive the requirements of this Section if the FAA
Administrator determines in writing that a waiver is required in the interest of national security,
documents the determination, and reports it to Congress.


B Clauses

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C Forms

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D Appendix 1 - Definitions Revised 1/2010

"Adequate evidence" means information sufficient to support the reasonable belief that a
particular act or omission has occurred.

"Affiliates." Business concerns, organizations, or individuals are affiliates of each other if,
directly or indirectly:
       (a) Either one controls or has the power to control the other, or

       (b) A third party controls or has the power to control both. Indicia of control
       include, but are not limited to, interlocking management or ownership, identity of
       interests among family members, shared facilities and equipment, common use of
       employees, or a business entity organized following the debarment, suspension, or
       proposed debarment of a contractor which has the same or similar management,
       ownership, or principal employees as the contractor that was debarred, suspended,
       or proposed for debarment.

"Agency," as used in this subpart, means any executive department, military department or
defense agency, or other agency or independent establishment of the executive branch.

"Civil judgment" means a judgment or finding of a civil offense by any court of competent
jurisdiction.

"Contractor," as used in this subpart, means any individual or other legal entity that:

       (a) Directly or indirectly (e.g., through an affiliate), submits offers for or is
       awarded, or reasonably may be expected to submit offers for or be awarded, a
       Government contract, including a contract for carriage under Government or
       commercial bills of lading, or a subcontract under a Government contract; or

       (b) Conducts business, or reasonably may be expected to conduct business, with
       the Government as an agent or representative of another contractor.

"Conviction" means a judgment or conviction of a criminal offense by any court of competent
jurisdiction, whether entered upon a verdict or a plea, and includes a conviction entered upon a
plea of nolo contendere.

"Debarment," as used in this subpart, means action taken by a debarring official to exclude a
contractor from Government contracting and Government-approved subcontracting for a
reasonable, specified period; a contractor so excluded is "debarred.''

"Debarring official" means:

       (a) An agency head; or

       (b) A designee authorized by the agency head to impose debarment.

"Excluded Parties List" means a list compiled, maintained and distributed by the General
Services Administration (GSA) containing the names and other information about parties
debarred, suspended, or voluntarily excluded under the Nonprocurement Common Rule or the
Federal Acquisition Regulation, parties who have been proposed for debarment under the
Federal Acquisition Regulation, and parties determined to be ineligible.
"Indictment" means indictment for a criminal offense. An information or other filing by
competent authority charging a criminal offense must be given the same effect as an indictment.

"Ineligible," as used in this subpart, means excluded from Government contracting (and
subcontracting, if appropriate) pursuant to statutory, Executive order, or regulatory authority
other than this regulation and its implementing and supplementing regulations; for example,
pursuant to the Davis-Bacon Act and its related statutes and implementing regulations, the
Service Contract Act, the Equal Employment Opportunity Acts and Executive orders, the Walsh-
Healey Public Contracts Act, the Buy American Act, or the Environmental Protection Acts and
Executive orders.

“Inverted Domestic Corporation” means a foreign incorporated entity which is treated as an
inverted domestic corporation under 6 U.S.C. 395(b) and (c), i.e., a corporation that used to be
incorporated in the United States, or used to be a partnership in the United States, but now is
incorporated in a foreign country, or is a subsidiary whose parent corporation is incorporated in a
foreign country. A foreign corporation is treated as an inverted domestic corporation for tax
purposes in accordance with 26 U.S.C 7874, rather than as a foreign corporation, if:

       (a) At least 80 percent of the stock is now held by former shareholders of the domestic
       corporation or partners of the domestic partnership, and

       (b) The foreign entity plus companies connected to it by 50 percent or more ownership
       do not have substantial business activities in the foreign country.

A foreign corporation that is treated as an inverted domestic corporation for U.S. Federal income
tax purposes is also treated as one for purposes of this section. A foreign entity that escapes the
tax consequences of 26 U.S.C 7874 only because the inversion transactions were filed prior to
the March 4, 2003 date is nevertheless treated as an inverted domestic corporation for purposes
of this section.



"Legal proceedings" means any civil judicial proceeding to which the Government is a party or
any criminal proceeding. The term includes appeals from such proceedings.

"Nonprocurement Common Rule" means the procedures used by Federal Executive Agencies to
suspend, debar, or exclude individuals or entities from participation in nonprocurement
transactions under Executive Order 12549. Examples of nonprocurement transactions are grants,
cooperative agreements, scholarships, fellowships, contracts of assistance, loans, loan
guarantees, subsidies, insurance, payments for specified use, and donation agreements.

"Preponderance of the evidence" means proof by information that, compared with that opposing
it, leads to the conclusion that the fact at issue is more probably true than not.

"Suspending official" means:
       (a) An agency head; or

       (b) A designee authorized by the agency head to impose suspension.

"Suspension," as used in this subpart, means action taken by a suspending official under 9.407 to
disqualify a contractor temporarily from Government contracting and Government-approved
subcontracting; a contractor so disqualified is "suspended."

"Unfair trade practices," as used in this subpart, means the commission of any or the following
acts by a contractor:

       (a) A violation of Section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) as
       determined by the International Trade Commission.

       (b) A violation, as determined by the Secretary of Commerce, of any agreement
       of the group known as the "Coordination Committee" for purposes of the Export
       Administration Act of 1979 (50 U.S.C. App. 2401, et seq.) or any similar bilateral
       or multilateral export control agreement.

       (c) A knowingly false statement regarding a material element of a certification
       concerning the foreign content of an item of supply, as determined by the
       Secretary of the Department or the head of the agency to which such certificate
       was furnished.
T3.2.2.8 - Describing FAA Needs Revised 10/2006


A Describing Needs

1 Product Description Revised 10/2006

a. Product description is a generic term for documents, such as specifications, standards,
voluntary standards, commercial item descriptions, or statements of work, that describe FAA’s
needs and are used for procurement purposes. The program official prepares the appropriate
type(s) of product description based on the specific need to be obtained.

b. A product description should:

        (1) Be accurate, clear, and concise;

        (2) Reflect minimum needs;

        (3) Not include overly restrictive requirements that would inhibit competition;

        (3) Have measurable delivery, performance, objectives, or outputs;

        (4) Encourage use of commercially-available items, when appropriate;

        (5) Specify environmentally sound, and energy and water efficient products and
        services, and reduce or eliminate hazardous materials and wastes;

        (6) Use metric measurements or a dual (metric/inch-pound) system of dimensions, when
        practical; and

        (7) Use voluntary standards when possible.


2 Types of Specification Revised 10/2006

a. A specification describes physical, functional, or performance requirements of a material,
product, system, data, or service, and includes criteria for determining whether or not the
requirements are met. Types of specifications include:

        (1) Performance specification that describes a product in terms of form, fit and function,
        and interface or interoperability requirements. "Form" describes the general constraints
        placed on the product; “fit" describes how the product must be compatible with related or
        existing products; and "function" describes what the product must do.
        (2) Design specification that describes a product in terms of its detailed form or
        composition, such as specific materials, dimensions, design concepts, drawings, and
        manufacturing processes. This type of specification requires a product to meet all aspects
        of the design requirements and vendors cannot substitute their own design preference.

        (3) Hybrid specification that combines design and performance specifications.

b. Performance specifications are generally preferred. Specifications may be coupled with a
statement of work (SOW) to fully define all work requirements. (See AMS Procurement
Toolbox Procurement Specification for a template and guidelines for preparing a specification.)


3 Standards Revised 10/2006

a. Standards establish uniform engineering and technical limitations and applications of items,
materials, processes, methods, designs, and engineering practices. It includes any related
criteria deemed essential to achieve the highest degree of uniformity in materials or products, or
interchangeability of parts used in those products.

b. A voluntary standard (non-Government standard) is established by a private sector
association, organization, or technical society, and available for public use; the term does not
include private standards of individual firms.

c. Product descriptions citing standards and specifications should identify each documents by
number, title, approval date and revision number. When appropriate, the program official
should tailor Government standards and specifications to eliminate unnecessary or non-value
added portions of the standard or specification.

d. ATO System Engineering organization (http://ato-p.se-apps.faa.gov/faastandards) maintains
FAA standards and system specifications applicable to National Airspace System equipment.
Also, information about Federal standards, specifications, and commercial item descriptions is
available online at General Services Administration (http://apps.fss.gsa.gov/pub/fedspecs), at
Department of Defense Single Stock Point (http://dodssp.daps.dla.mil), and at National Institute
of Technology and Standards (http://www.standards.gov).


4 Commercial Descriptions Revised 10/2006

a. Commercial item descriptions describe functional or performance characteristics of an item
and include industry standards, manufacturer's standards, and standard grades.

b. The FAA should use commercial products and services when possible. Consistent with this
emphasis, product descriptions that describe voluntary commercial standards or use commercial
item descriptions are preferred and will generally result in shorter delivery lead times than will
use of detailed design or performance specifications.
c. The use of additional FAA specifications or testing requirements is generally not appropriate
with commercial descriptions.


5 Brand Name Added 10/2006

a. Brand name or equal, and brand-name mandatory, product descriptions may be used when in
the FAA’s best interest.

b. Brand name or equal descriptions identify products by brand name, make, model, or catalog
number and name of the manufacturer. Brand name or equal product descriptions must include
both the brand name and a description of most important physical, functional, or performance
characteristics that an equal product must meet to be acceptable for award. Other products (an
equal product) must have the same salient characteristics as a brand name product.

        (1) The rational basis for using brand name or equal description must be documented by
        the program official and address:

                (a) FAA’s requirement in terms of specific physical, functional, or performance
                characteristics, and interfaces or interoperability;

                (b) Unique features, functions, or characteristics of the brand name product that
                satisfies FAA’s requirement; and

                (c) Market analysis of other manufacturer’s products, and a description of why
                other product’s functions, features, performance, interfaces, or interoperability do
                not meet FAA’s requirements.

        (2) When a brand name or equal description is used, the solicitation must state the brand
        name product and salient physical, functional, performance, and interoperability or
        interface characteristics of the brand name product so that vendors may offer alternative
        but equal products.

c. Brand name-mandatory descriptions identify a specific make, model, or catalog number, and
manufacturer of a product. This type of description differs from brand name or equal because
vendors may not provide an equal item. For brand name-mandatory, a single source justification
is required (see AMS Procurement Guidance T3.2.2.4 "Single Source").


6 Statement of Work Revised 10/2006

a. A properly written statement of work (SOW) is critical for the FAA to communicate and
acquire what it needs. An SOW describes objectives, purpose, and requirements for the work to
be accomplished. When possible, an SOW avoids defining the approach (“how to”) to
performing the work and should rely on the marketplace to define its own solution. The degree
of specificity in an SOW depends on the type and size of the project. When possible, service
contracts incorporate performance-based methods to encourage contractor innovation and
efficiency, and to help ensure contractors provide timely, cost effective, and quality contract
performance. Also, to the extent possible, an SOW complies with plain language requirements
described in Order 1000.36, FAA Writing Standards.

b. The 4 “W”s. An SOW addresses who, what, when, and where of the required work, as
applicable. It clearly defines expected outputs, deliverables, or objectives that can be measured.
All 4 "W"s below are likely to be necessary in a service-type contract and should be included
when appropriate in other types of work:

       (1) What work will the contractor do?

       (2) When is the work to be performed?

       (3) Who should perform the work (what minimum qualifications, skills, education, and
       experience are needed)?

       (4) Where must the work be performed?

c. Redundancy. The SOW should not repeat material included in other parts of the contract; e.g.,
general provisions, special provisions, payment, etc.. This makes a contract difficult to modify
and can create ambiguity when even slightly different words are used to express the same thing
in different places in the contract.

d. Writing Style. The SOW is written in a clear and direct style, using simplest words, phrases,
and sentences, and without ambiguity so that the document will be readily understood.
Indefinite or ambiguous terms, words or sentences are difficult to enforce and administer, and
may be construed against the FAA.

e. Active vs. Passive Voice. Use direct, active sentence structure that clearly states the subject
that will perform the requirement, as in the following example: "The Contractor must maintain
all government property related to the contract." This sentence uses the active voice that clearly
states the subject (“contractor”) must perform the action (“maintain property”). The drafter
should not use passive voice sentences. Passive voice implies who performs the action, as in the
following example: "The government property related to the contract must be maintained." In
this sentence, the subject who must maintain the property is not clearly stated, and could be
interpreted as the FAA or contractor. Statements that do not directly assign an action to a
subject are ambiguous, may be interpreted incorrectly, and may prevent the FAA from enforcing
the rights intended in the statement.

f. Terms/Abbreviations. The first occurrence of new or complex terms should always be in full
text. If an abbreviation will be used in further occurrences of the word, show the abbreviation in
parenthesis following the first occurrence of the word.

g. Word Selection.
       (1) Must/Will. The term “must” is used to specify a mandatory action from which the
       contractor cannot deviate. Any expression of a required action by the contractor should
       be stated as "the contractor must....". The word "will" is used to express declaration of
       future action on the part of the FAA. (As required by FAA’s plain language order
       1000.36, “must” replaces the traditionally used “shall” when specifying mandatory
       action).

       (2) Any/Either/Or. These words imply a choice that either party may make, and should be
       avoided.

       (3) Use of Pronouns. To avoid misinterpretation, use or repeat the noun rather than
       substitute it with a pronoun. Pronouns can create uncertainty as to what or whom the
       pronoun refers to which again promotes ambiguity.

h. Other Elements. The SOW should be tailored to the specific need. The following sections
may be included when appropriate, provided they are not addressed elsewhere:

       (1) General. This section should provide a broad overview of the SOW. It could include a
       general description of the scope of work;

       (2) If there are personnel restrictions or requirements, they should be included;

       (3) Quality control requirements;

       (4) Definitions. A definition section includes all special terms and phrases used in the
       SOW. The definitions must clearly establish what is meant so that all parties will fully
       understand them. Also, SOW writers should carefully review trade terms or terms
       considered common to the industry, and provide definitions when those terms represent
       "slang" or are terms used only in specific geographical or industrial areas;

       (5) Government-furnished property and services. If the Government will provide any
       property or services for the contractor's use during performance of the contract, this
       section should describe what will be given. If the list is fairly extensive, make it into an
       exhibit referenced in this section and attached elsewhere;

       (6) Contractor-furnished items. In this section, describe material and equipment that the
       contractor must provide. As with government furnished property, if the list is lengthy,
       reference it in this section and make it an exhibit attached elsewhere;

       (7) Specific Work/Tasks. Work/tasks to be performed by the contractor should be
       included in this section;

       (8) Applicable Technical Orders, Specifications, Regulations, and Manuals. This section
       should contain a list of applicable directives. Tell what happens when a directive changes
       during the life of the contract and state whether each directive is mandatory or advisory
       on the contractor;
        (9) Delivery requirements;

        (10) Packaging, packing or marking; and

        (11) Technical Exhibits. Some items are too bulky to include in the main body of the
        SOW. These items should be included as technical exhibits.

(i) Further information about preparing an SOW is described in MIL-HDBK-245D “Preparation
of Statement of Work,” available online in Department of Defense’s ASSIST database at:
assist.daps.dla.mil/online/start


7 Statement of Objective Added 10/2006

a. A statement of objective (SOO) describes basic, top level results to be achieved. An SOO
provides potential vendors flexibility to develop cost effective solutions and innovative
alternatives meeting the stated objectives. The SOO includes at least:

        (1) Purpose;

        (2) Scope or mission;

        (3) Period and place of performance;

        (4) Background;

        (5) Performance objectives, i.e., required results; and

        (6) Any operating constraints.

b. Vendors use an SOO to propose a detailed statement of work that the FAA evaluates as part
of contractor source selection. The SOO does not become part of a resulting contract.
Additional information on developing an SOO is in MIL-HDBK-245D “Preparation of
Statement of Work;” and in the Air Force’s “Statement of Objectives (SOO) Preparation Guide,”
available on line at: http://www.acquisition.gov/comp/seven_steps/library/DOAFsoo-prep.pdf


B Clauses

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C Forms

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T3.2.3 - Cost and Price Methodology Revised 10/2007


A Cost and Price Methodology

1 Proposal Analysis Revised 7/2010

a. Cost or Pricing Data.

        (1) Requirement Decision. A Contracting Officer (CO) has discretion to require cost or
        pricing data to assure negotiated prices are fair and reasonable. Certified cost and pricing
        data must be requested only when the CO does not have reasonable assurance that costs
        or prices are fair and reasonable based on price analysis or other means of
        evaluation. When considering the extent to which cost and pricing data may be required,
        the CO should consider the cost and schedule burden on the contractor to provide the
        information.

                (a) When the CO determines adequate price competition exists, certified cost or
                pricing data must not be requested.

                (b) Adequate price competition may exist when:

                         (i) Two or more responsible offerors competing independently submit
                         priced offers responsive to the Agency expressed requirement;

                         (ii) There was a responsible expectation based on market research or
                         other assessment that two or more responsible offerors competing
                         independently would submit priced offers responsive to the screening
                         information request's expressed requirement even though only one offer is
                         received from a responsible responsive offeror; or

                         (iii) Price analysis clearly demonstrates that the proposed price is
                         reasonable in comparison with current or recent prices for the same or
                         similar items purchased in comparable quantities, and under comparable
                         terms and conditions under contracts that resulted from adequate price
                         competition.

                (c) If the CO determines that the level of competition does not support the
                determination of price reasonableness, or the otherwise successful offeror's price
                cannot be determined to be reasonable, the CO may require certified cost or
                pricing data or non-certified cost or pricing data to the extent necessary to support
                a determination of a fair and reasonable price.

                (d) In situations where adequate price competition does not exist, the decision to
                require certified or non-certified cost or pricing data and the level of data required
       should be based on the specific circumstances of the procurement taking into
       account the factors for consideration described in Subparagraph (3), "Factors to
       Consider."

(2) Types of Information and Evaluation Method. The CO may require information to
support proposal analysis in any of the following degrees of detail:

       (a) No cost data, in which case a price analysis is conducted,

       (b) Non-certified cost or pricing data, in which a price analysis and cost analysis
       appropriate to the data submitted are conducted; or

       (c) Certified cost or pricing data, where the offeror certifies to the accuracy,
       completeness and currency of the data and both price and cost analyses are
       conducted.

(3) Factors To Consider.

       (a) The CO has the flexibility to determine:

              (i)    Whether or not to require non-certified cost or pricing data;

              (ii)   To what degree or level of detail data should be requested; and

              (iii) Whether or not the data should be certified, except for situations
              where adequate price competition exists, where the CO must not require
              cost or pricing data.

       (b) The CO may consider the following factors to determine the appropriate data
       requirement:

              (i) Recent Pricing Data. Availability of information on prices for the
              same or similar goods or services procured on a competitive basis.

              (ii) Degree of Competition Attained. Level to which competitive market
              forces can be expected to influence submission of reasonable prices.

              (iii) Uncertainty of the Market Place. How volatile market prices or
              technological changes may impact vendor prices or costs.

              (iv) Availability of Independent Cost Estimate/Data. The degree of
              confidence the CO has in the internal estimate or other data which would
              provide an effective means to objectively evaluate proposed costs or
              prices.
                      (v) Technical Complexity of Procurement. The degree to which
                      developmental effort or technical complexity is inherent in the
                      requirement.

                      (vi) Contract Type. The degree to which the decision of contract type
                      mitigates the risk to the agency.

       (4) Requirement for Certified Cost or Pricing Data. When certified cost or pricing data
       are necessary, AMS Clauses 3.2.2.3-38, Requirements for Certified Cost or Pricing Data
       or Other Information, and 3.2.2.3-39, Requirements for Certified Cost or Pricing Data or
       Other Information – Modifications, must be inserted in the SIR. The clauses require the
       contractor to submit the information contained in the Appendix "Instructions for
       Submitting Cost/Price Proposals When Certified Cost or Pricing Data are Required."

       (5) Requesting Information. When requesting non-certified cost or pricing data, the
       information should be limited to the extent necessary to determine price reasonableness
       or the cost realism. The level of detail and format of the data requested will be
       determined by the CO. Generally this will be a modified version of information
       requested in subparagraph (4), "Requirement for Certified Cost or Pricing Data" above.

       (6) Subcontracts. Contractors are required to submit certified cost or pricing data for
       proposed subcontracts or subcontract modifications only when necessary to determine the
       reasonableness of the proposed contract or subcontract price, including negotiated final
       pricing actions. The contractor is responsible for performing cost or price analysis when
       determining price reasonableness on subcontract proposals and for submitting the
       subcontract cost or pricing data if requested by the CO.

b. Proposal Analysis. The procurement team is responsible for evaluating proposals using the
methods of price and cost analysis appropriate to the procurement. The CO is responsible for
determining whether contract prices are fair and reasonable.

c. Price Analysis. Price analysis is a process of examining and analyzing a proposed price
without evaluating separate cost elements and proposed profit/fee. Price analysis is the most
commonly used method of proposal analysis and should be performed on all contractor
proposals. Even when cost analysis is performed to evaluate individual cost elements of a
contractor's proposal, some form of price analysis is needed to ensure that the proposed price is
fair and reasonable. There are several techniques that may be used in performing price analysis:

       (1) Comparison of proposed prices received in response to the screening information
       request.

       (2) Comparison of prior proposed prices and contract prices with current proposed prices
       for the same or similar end items and services in comparable quantities.
       (3) Application of rough yardsticks (such as dollars per pound or per horsepower, or
       other units) to highlight significant inconsistencies that warrant additional pricing
       inquiry.

       (4) Comparison with competitive published catalogs or lists, published market prices or
       commodities, similar indexes, and discount or rebate arrangements.

       (5) Comparison of proposed prices with independent cost estimates.

       (6) Ascertaining that the price is set by law or regulation.

d. Cost Analysis.

       (1) Cost analysis is the review and evaluation of the separate cost elements and proposed
       profit/fee of an offeror's proposal. The CO will determine whether cost analysis is
       appropriate. Cost analysis is not required to evaluate established catalog or market
       prices, prices set by law or regulation, and commercial items. If there are significant
       disparities in proposed prices, a limited form of cost analysis may be used to investigate
       the cause of the disparities. Cost analysis involves examining data submitted by the
       contractor and the judgmental factors applied in projecting estimated costs. Cost
       analysis also includes:

               (a) Verification that the contractor's cost submissions are in accordance with
               disclosed cost accounting procedures;

               (b) Comparisons with previous costs; and

               (c) Forecasts of future costs based on historical cost experience.

       (2) Cost analysis is appropriate when factors affecting the procurement will not ensure a
       fair and reasonable price based on price analysis alone, and/or the agency needs an
       understanding of the cost buildup of the proposal to verify cost realism and
       reasonableness. The data required to perform the cost analysis should be limited to those
       cost elements that are necessary to ensure a fair and reasonable price determination.

       (3) Cost analysis involves the following techniques and procedures:

               (a) Verification of cost or pricing data and evaluation of cost elements.

               (b) Evaluating the effect of the offeror's current practices on future costs.

               (c) Comparison of the costs proposed by the offeror with historical and actual
               costs, and previous cost estimates for the same or similar items.

               (d) Analysis of the contractor's evaluation in determining the reasonableness of
               the subcontract costs.
               (e) Verification of the offeror's proposed cost to ensure that it reflects cost realism
               and reasonableness.

               (f) Review to determine whether any cost or pricing data that is necessary to make
               the contractor's proposal accurate, complete, and current has been submitted or
               identified in writing.

e. Field Pricing Support.

       (1) Field pricing support is independent support intended to give the CO a detailed
       analysis report of the contractor's cost proposal. The field pricing support personnel
       include, but are not limited to, COs, contract auditors, price analysts, quality assurance
       personnel, and engineers.

       (2) The CO may request field pricing support when such support is deemed necessary
       before negotiating any contracts or modifications. Methods of field pricing support may
       include:

               (a) Rate verifications;

               (b) Third party audit;

               (c) Estimating system audit; and

               (d) Proposal analysis.

f. Pre-and post-award audits.

       (1) Program offices, through the CO, must request pre-award or post-award Defense
       Contract Audit Agency (DCAA) audits as appropriate on all cost
       reimbursement contracts estimated to exceed $100 million (including all options). In
       addition, DCAA audits must also be performed on at least 15% of all cost reimbursement
       contracts under $100 million. At the discretion of the CO, audits may also be performed
       on other types of contracts. Lines of business will fund required pre- and post award
       audits and will include an estimate for the cost of the audits in the Acquisition Program
       Baseline. The Implementation Strategy and Planning Document will also address the
       approach, responsible organizations, and activities for obtaining audits. Individual
       contracting offices will be responsible for the managing and tracking of these audits. The
       final decision concerning which contracts under $100 million will be audited will rest
       with the Chief of the Contracting Office (COCO). Final audits are addressed as part of
       the contract closeout process in T3.10.1A.11.

       (2) COs are encouraged to use good business judgment consistent with applicable AMS
       guidance in deciding whether to obtain such audits. If a CO decides not to obtain such an
       audit, the file must be documented with a rational basis as to why the audit was not
       obtained. The cost of the audit in comparison to the expected payback must be
       considered.

g. Defective Pricing.

       (1) Defective certified cost or pricing data is data which was provided to FAA in support
       of a proposal and which was not current, accurate, or complete. It may only occur when
       certified cost or pricing data is provided. If, before agreement in price, the CO learns
       that any certified cost or pricing data the contractor provided are inaccurate, incomplete,
       or not current, the contractor must be notified immediately to determine if the defective
       data increase or decrease the contract price. The CO must then negotiate using any new
       data submitted or making allowance for the incorrect data.

       (2) If, after award, certified cost or pricing data are found to be inaccurate, incomplete, or
       noncurrent as of the date of agreement, the CO should give the contractor an opportunity
       to support the accuracy, completeness, and currency of the questioned data. In addition,
       the CO may obtain an audit to evaluate the accuracy, completeness, and currency of the
       data. The contractor should reimburse FAA for any payments issued based on defective
       cost or pricing data during the contract period. The reimbursement should include the
       amount identified by the CO including profit or fee and interest accrued from the date of
       the payment. If defective pricing is determined to exist, this fact should be noted in
       future past performance evaluations.

       (3) If a contractor and subcontractor submitted certified cost or pricing data, the CO has
       the right, under the clause prescribed in the contract to reduce the contract price if it
       significantly increased due to contractor submitted defective data. This right applies
       whether the data supported subcontractor cost estimates or firm agreements between
       subcontractors and contractors. In order to afford an opportunity for corrective action,
       the CO should give the contractor reasonable advanced notice before determining to
       reduce the contract price when:

               (a) A contractor includes defective subcontract data in arriving at the price but
               later awards the subcontract to a lower priced subcontractor (or does not
               subcontract for work). Any adjustment in the contract price due to defective
               subcontract data is limited to the difference, plus applicable indirect cost and
               profit/fee, between the subcontract price used for pricing the contract and either
               the actual subcontract or the actual cost to the contractor.

               (b) Under cost-reimbursement contracts and fixed price incentive contracts,
               payments to subcontracts that are higher than they would be had there been no
               defective subcontractor cost or pricing data will be the basis for disallowance or
               non-recognition of costs.

h. Profit/Fee Analysis.
       (1) When price analysis techniques are sufficient to ensure a fair and reasonable price,
       analysis of profit/fee is not appropriate.

       (2) When cost analysis is required for price negotiation, profit/fee must be analyzed.

               (a) Profit/fee should be analyzed with the objective of rewarding contractors for:

                      (i)    Financial and other risks they assume;

                      (ii)   Resources they use; and

                      (iii) Organization, performance, and management capabilities they
                      employ.

               (b) Consideration should be given to the:

                      (i)    Ratio of indirect costs to direct costs;

                      (ii)   Extent of subcontracting;

                      (iii) Complexity of materials requirements; and

                      (iv) Commitment of capital investments to contract performance.

       (3) For the purposes of establishing a negotiation position the CO may use some
       structured method (e.g. agency-mandated weighted guidelines) for determining the
       profit/fee appropriate for the work to be performed. The CO is encouraged to establish a
       structured mechanism under cost reimbursable contracts which relates performance to fee
       amounts earned.

i. Cost Realism.

       (1) Cost realism means the costs in an offeror's proposal:

               (a) Are realistic for the work to be performed;

               (b) Reflect a clear understanding of the requirements; and

               (c) Are consistent with the various elements of the offeror's technical proposal.

       The emphasis of a cost realism analysis is to determine whether costs may be overstated
       or understated. Cost realism helps to ascertain the potential risk to FAA as a result of the
       offeror being unable to meet contract requirements.

       (2) Cost realism analysis is an objective process of identifying the specific elements of a
       cost estimate or a proposed price and comparing those elements against reliable and
       independent means of cost measurement. This analysis judges whether or not the
       estimates under analysis are verifiable, complete, and accurate, and whether or not the
       offeror's estimating methodology is logical, appropriate, and adequately explained. This
       verifies that the cost or prices proposed fairly represent the costs likely to be incurred for
       the proposed services under the offeror's technical and management approach.

       (3) A practical example of the need for cost realism analysis is the tendency of some
       contractors to "buy-in" to a contract award. "Buying-in" refers to an offeror submitting
       an offer below anticipated contract costs. Contractors may "buy-in" for purely business
       reasons or may expect to recover losses through an increase of the contract price after
       award or through receiving follow-on contracts at artificially high prices. Buying-in may
       decrease competition or result in poor contract performance. The CO should minimize
       the opportunity for buying-in through the following appropriate actions:

               (a) Use cost analysis in evaluating proposals for follow-on contracts and change
               orders;

               (b) Price contract options for additional quantities together with the firm contract
               quantity, that equal program requirements;

               (c) Develop an estimate of the proper price level or value of the supplies or
               services to be purchased; and

               (d) Verify that contract type and price are consistent with the uncertainty and risk
               to FAA and contractor while at the same time providing the contractor with the
               greatest incentive for efficient and economical performance.

       (4) The foregoing does not mean that the CO should refuse to award a contract when a
       buy-in is apparent. The CO should evaluate the attendant risks of costs escalating out of
       control or the contractor not being able to successfully complete performance. FAA
       reserves the right to make an informed judgment and decide whether to award or not
       based on downstream consequences emanating from potential change orders, etc.

j. Unbalanced Offer. Offeror proposals should be analyzed to determine whether they are
unbalanced with respect to prices or separately priced line items. This is particularly important
when evaluating the prices for options in relationship to the prices for the basic requirements.
An offer is mathematically unbalanced if it is based on prices which are significantly less than
the cost of some contract line items and significantly overstated in relation to cost for others.
An offer is materially unbalanced if it is mathematically unbalanced and if there is reasonable
doubt that the offer would result in the lowest overall cost to FAA (even though it is the lowest
evaluated offer); or the offer is so grossly unbalanced that its acceptance would be tantamount to
allowing an advance payment. Offers that are materially unbalanced may be rejected.

Depending on the nature of the procurement, price analysis or cost analysis should be used in
determining whether offers are materially unbalanced.
2 Independent Government Cost Estimate Added 10/2007

a. Purpose of an IGCE

       (1) An independent Government cost estimate (IGCE) is an internal Government
       estimate, supported by factual or reasoned data and documentation, describing how much
       FAA could reasonably expect to pay for needed supplies or services. It serves as:

               (a) The basis for reserving funds for the procurement action;

               (b) A method for comparing cost or price proposed by offerors;

               (c) An objective basis for determining price reasonableness when only one offer is
               received in response to a solicitation; and

               (d) A means of detecting offeror buy-ins and identifying unbalanced prices.

       (2) The CO must ensure, through cost and/or price analysis, that the final price is fair and
       reasonable for all acquisitions. One of several techniques in performing price analysis is
       comparison of the proposed prices with an IGCE. Its primary objective is to provide the
       CO with an unbiased, realistic cost estimate for proposed supplies, services, and
       construction.

       (3) A well supported IGCE is a valuable tool for price negotiations, especially in the case
       of a single source acquisition. Clearly defined and supported cost elements such as labor,
       overhead, and travel enable FAA to make informed negotiation decisions. A well
       reasoned IGCE helps FAA to verify completeness of offeror or contractor’s cost
       proposals.

b. Applicability. An IGCE is required for procurement actions over $100,000 (or for any lower
dollar value procurement action when the CO determines it necessary), except for:

       (1) Modifications to exercise priced options;

       (2) Incremental funding modifications;

       (3) Delivery orders for priced supplies or services under indefinite delivery contracts;

       (4) Acquisition of real property (i.e., land, space, or interest therein); or

       (5) Supplies or services with prices set by law or regulation.

c. Responsibility for Preparation.
       (1) The program office is responsible for the IGCE. Non-Government personnel
       (excluding any personnel of potential offerors) may support a program official in
       preparing the IGCE. Because the IGCE is procurement sensitive, access to it must be on
       a need to know basis. The IGCE must be signed and dated by the Government preparer.

       (2) The IGCE must not be based on information furnished solely by a potential offer that
       may be considered for award, or based on an offeror’s cost/price proposal after receipt of
       offers.

d. When to Submit. An IGCE should accompany the procurement request package. The IGCE
becomes part of the official contract file documentation.

e. Proper Marking. Each IGCE must be designated and marked, “FOR OFFICIAL USE
ONLY.”

f. Commercial and Noncomplex Procurement Actions. Published price lists, catalog prices,
historical prices, General Services Administration (GSA) schedule prices, or market survey
prices may suffice for an IGCE involving standard commercial materials, supplies, equipment
and noncomplex services readily available in the commercial market. Lump sum estimates for
commercial and noncomplex supplies and services do not break down the estimate into various
cost elements. An IGCE for commercial and noncomplex products and services may entail
determining the market value of an item or service and using that as the basis for the IGCE,
documenting the research, and then furnishing this information to the CO.

g. Differences Between Proposal Price and IGCE. When there are differences greater than 15%
between the price of the offer proposed for award and the IGCE, the CO should notify the
program official for appropriate remedial actions.

h. Detailed and Lump Sum Estimates. The complexity of an IGCE depends on the nature and
dollar value of the requirement, and an IGCE could be a detailed cost estimate or a lump sum
estimate. Detailed estimates encompass an analysis and estimation for individual cost elements
(i.e., direct labor, material, overhead, other direct costs, general and administrative expense, and
profit). In contrast, the lump sum estimate projects cost on a “bottom line” basis. Lump sum
estimates may be useful when the price of an item or service can be determined without
examining individual cost elements, such as when acquiring commercial items. The program
official determines whether the IGCE should be developed as a lump sum estimate, detailed cost
estimate, by contract line item number (CLIN), or by work breakdown structure (WBS).

i. Cost Estimates by Work Breakdown Structure (WBS). Cost estimates by WBS provide detailed
cost estimates for each activity in the WBS and may include vendor quotes or catalog prices for
materials and engineering labor estimates.

j. Market Research and Analysis. Market research and analyses may be used to collect current
cost information.

k. Cost Estimation.
       (1) Cost estimation is a field of practice that can be simple to complex, depending on the
       requirement. Cost estimation methods for major system, facilities, and equipment
       acquisitions are complex and require defined requirements, extensive market research
       and expert assistance.

       (2) Different approaches are used to make cost estimates. The cost estimator decides the
       appropriate approach and it will vary depending on the requirement, amount of data that
       the estimator has about the item or service to be estimated and the time frame for
       completion of the estimate. There are five terms used within the cost analysis community
       to describe the usual methods of developing estimates: analogy, parametric, expert
       opinion, engineering and actual cost (extrapolation). There are many Government and
       private sector publications, models, and tools available on cost estimation. Listed below
       are several resources available for estimating costs:

       DoD Contract Pricing Reference Guide Volume I: Chapter 6.1 and Chapter 1.1:
       http://www.acq.osd.mil/dpap/contractpricing/chap-index.htm

       NASA Parametric Cost Estimating Handbook:

       http://cost.jsc.nasa.gov/PCEHHTML/pceh.htm

       U.S. Army Cost Analysis Manual:

       http://www.asafm.army.mil/ceac/ce/ce.asp

       NASA Cost Estimating Handbook:

       http://www.nasa.gov/offices/pae/organization/cost_analysis_division.html

l. Developing a Detailed Cost Estimate. An IGCE should be independently prepared by a
subject matter expert(s). To begin, the estimator should perform a detailed analysis of the
requirement. The estimator should be familiar with the market for the item, including prior
prices, inflation, market conditions, quantity, existing and emerging technologies, and
substitutions. The estimator should be able to explain clearly the rationale used to develop the
estimate and document the results. The estimator should list any assumptions, methodology
used, and reference material used in developing the estimate.

m. Detailed Cost Estimate – Standard Elements. The following description of standard cost
elements used in a detailed estimate is intended to assist in the preparation of a detailed IGCE. A
sample format for a detailed cost estimate is in Appendix 2.

       (1) Estimating Labor Hours

               (a) Labor costs are usually the most significant part of the cost estimate for a
               contract. Direct labor is the labor directly applied to the task or project performed
       under a contract. Estimating hours for individual labor categories may be
       achieved using one or a combination of several techniques.

       (b) Evaluating historical actual cost data gathered from FAA contracts for similar
       goods or services to estimate future requirements. The comparison between past
       and future items or services can be accomplished at a summary or task level.
       Many companies keep detailed cost records at the task level, which may be
       utilized if FAA has access to these records. When using this method consider
       aberrations that could skew the estimate. Consider also possible reductions in
       labor hours resulting from improvement from experience. This reduction can be
       estimated using learning curve theories.

       (c) Labor standards may be used to estimate labor hours for manufacturing or
       repetitive functions. Labor standards are developed from data within the
       company, data published by trade associations, and data gathered from various
       other reference sources. For example, a company may determine that to produce
       a widget requires a standard of 12 hours of an engineer’s time. This means that
       on average 12 engineer hours are needed to produce one widget; the actual time
       may vary from widget to widget.

       (d) Estimates based on the professional experience and judgment of engineers
       and managers may be used to estimate labor hours, but it is the least accurate
       approach to estimating. Determining the proper mix of labor categories is
       important to make sure that the type of labor as well as the skill level of workers
       is appropriate for the work to be performed.

       (e) Labor hours may vary from year to year depending on the goods or services
       acquired. Estimated hours should be adjusted when more or less work is
       anticipated in different years.

       (f) The productive hours for full-time contractor personnel should account for the
       anticipated vacations, holidays, sick days, and other administrative days. The
       number of potential work hours in a year is 2,080 (40 hours per week X 52 weeks
       per year); from the 2,080 hours estimated hours for vacation time (e.g. 120 hours),
       holidays (e.g. 80 hours), and sick leave (e.g. 40 hours) should be deducted (2,080
       hours – 120 vacation hours – 80 holiday hours – 40 sick leave hours = 1,840
       productive or direct hours).

Documenting the methods used to estimate labor hours is essential to support the
independent government cost estimate. This information must be included in the IGCE
narrative. Maintain copies of all source information.

(2) Estimating Labor Rates. Estimates for labor rates may be derived from many sources
including the following:
(a) Historical trends on FAA contracts for similar goods or services (be sure to
determine if the labor rates are for direct labor or fully-loaded rates that include
overhead, general and administrative, and profit) such as MASS, BITS II, and
NISC.

(b) Labor rates for similar services from General Services Administration (GSA)
Federal Supply Schedules (FSS), Bureau of Labor Statistics (BLS), Office of
Personnel Management (OPM) for comparison to federal employee salaries, and
private surveys of labor rates may be used. Be sure to determine if the labor rates
are for direct labor or fully-loaded rates that include overhead, general and
administrative, and profit.

(c) Geography may influence labor rates. Work locations should be considered
because labor rates vary significantly by location for the same labor skills.

(d) When the potential contractor is known (such as in a single source or contract
modification situation) forward pricing rate agreements (FPRA) with the federal
government (often through FAA or Defense Contract Audit Agency (DCAA))
may be available and should be used to support estimated labor rates.

(e) In the situation of a known contractor, a comparison of labor rates among
FAA contracts should be performed; that is checking the labor rates with the labor
rates on other FAA contracts (such as MASS, BITS II, and NISC) for the same
labor categories by the same contractor. This comparison avoids paying higher
rates for the same labor categories by the same contractor for similar work.

(f) Labor rates for future periods may be estimated by performing a trend analysis
of past labor rates on similar projects, or by escalating labor rates. Escalation
must be substantiated by a recognized source such as Bureau of Labor Statistics
indices (Consumer Price Index or Producer Price Index).

(g) Estimates for exempt employees may be estimated for positions performing
similar duties covered in Office of Personnel Management (OPM) position
descriptions (PD) for general schedule (GS) or wage grade (WG) employees. For
example, if an information technology management analyst was required, using
OPM’s “position classification” worksheet for a series GS-2210 for an
information technology management analyst, following the worksheet
instructions, the required analyst may be rated as a GS-14 employee equivalent.
The salary tables published by OPM states that a GS-14, at a step 5 earns
$106,000 per year or $50.95 per hour. This figure could be used as the basis for
estimate.

(h) Estimates for non-exempt labor for services and construction are available
from the Department of Labor wage determinations provided under the provisions
of the Service Contract Act and the Davis Bacon Act. A non-exempt employee
covered by one of these acts must be paid no less than the rate of pay listed in the
         wage determination. Examining the list may help in determining the appropriate
         labor categories.

Documenting the methods used to estimate labor rates is essential to support the
independent government cost estimate. This information must be included in the IGCE
narrative. Maintain copies of all source information.

(3) Estimating Indirect Costs.

         (a) The following is a list of common indirect cost terms and definitions:

            Terms                                          Definitions
Indirect Cost                Any cost that cannot be directly identified with a single final cost
                             objective (e.g. a specific job or product) but can be identified with
                             multiple final cost objectives (e.g. two or more jobs or products).
Overhead Expenses            Indirect costs such as building maintenance, administrative labor
                             (that benefits multiple jobs), supervision (of multiple jobs), and
                             employee fringe benefits (which are often estimated as a separate
                             overhead rate).
General and Administrative   General management (e.g. CEO), financial (e.g. payroll), or other
(G&A) Expenses               (e.g. headquarters building maintenance) expenses that benefit the
                             business as a whole.
Material Handling Rate       Costs associated with ordering, receiving, inspecting, and shipping
                             materials even when purchased for FAA at cost.
Facilities Capital Cost of   FCCM is an imputed cost that represents the cost to the contractor
Money (FCCM)                 employing capital when investing in facilities or assets under
                             construction that benefit FAA.
Indirect Cost Pool           An indirect cost pool is a logical grouping of incurred costs
                             identified with multiple final cost objectives.
Cost Base                    The contractor organization that will receive an equal share (by
                             application of a rate) of costs in an indirect cost pool.

         (b) When the potential contractor is known (such as in a single source or contract
         modification situation) forward pricing rate agreements (FPRA) with the federal
         government (often through FAA or Defense Contract Audit Agency (DCAA))
         may be available and must be used to support estimated indirect rates.

         (c) Understanding the composition of each indirect cost or overhead pool is
         important to ensure proper treatment of costs and to avoid duplication. If a cost
         estimate contains fully loaded rates, fringe benefits, overhead, G&A, and fee may
         already be included. Additional overhead should not be applied to avoid over
         estimating the cost.

(4) Material Overhead. Material overhead or material handling includes the expenses
associated with acquiring, transporting, receiving, inspecting, handling, and storing
materials. Different options exist for collecting and allocating indirect material-related
costs. Because material costs can vary significantly from contract to contract, a separate
pool ensures that overhead costs are charged commensurately with the material cost in
the contract.
(5) Labor Overhead.

       (a) Labor overhead includes:

              (i) Indirect labor consisting of supervision, inspection, maintenance,
              custodial, and other personnel whose labor is not charged directly to a
              production or operation;

              (ii) Costs associated with labor such as Social Security, unemployment
              taxes, and fringe benefits, if not in a separate indirect cost pool;

              (iii) Indirect supplies such as small tools and janitorial supplies; and

              (iv) Fixed charges such as depreciation, insurance, rent, and property
              taxes.

       (b) Overhead may vary significantly if the work is being performed on-site
       (contractor’s location) or off-site (government’s location). Off-site work
       normally is lower because the contractor does not need to maintain a building and
       avoid costs such as utilities.

       (c) Labor overhead is often separated by labor function such as engineering and
       manufacturing overhead.

(6) Fringe Benefits Overhead. Contractors often have a separate pool for fringe benefits.
Fringe benefits may include:

       (a) Vacation leave;

       (b) Sick pay;

       (c) Holidays;

       (d) Insurance;

       (e) Payroll taxes; and

       (f) Supplemental unemployment benefits.

(7) General and Administrative (G&A) Expense.

       (a) General and administrative costs typically include labor for corporate officers,
       clerical personnel, accountants, human resources personnel, purchasing agents,
       and attorneys. It also includes the cost of corporate level equipment, office
       supplies, utilities, interest expense, and legal costs. Unallowable expenses such as
entertainment expenses and fines and penalties may not be included in the G&A
pool.

(b) The G&A rate is multiplied by one of three groups of costs:

       (i) Total cost input (TCI) is the preferred base to apply the G&A rate.
       The total cost input base includes all costs, both direct and indirect
       (excludes profit). This approach must be used unless there is a reasonable
       basis to use one of the other approaches.

       (ii) Value-added cost input is total cost minus material and subcontract
       costs. Value-added is appropriate when the inclusion of material and
       subcontract costs would distort the G&A allocation. When material and
       subcontract costs are significant, the use of value-added G&A allocation
       may be a better measure of G&A expense than total cost input.

       (iii) Single element cost input would use one cost element to allocate
       G&A expense. For example, the G&A rate would be multiplied by only
       the direct labor cost. This approach may be used when there are no other
       significant cost elements, or when other significant elements vary in the
       same proportion to total costs. This is the least preferred method.

(8) Material Costs. The following approaches could support the estimated cost
for materials:

       (a) If the contract is a follow-on or is similar to another FAA contract, the
       purchase history of the costs of materials could be a basis for estimate.
       The IGCE narrative should explain the similarities between the needed
       material and the historical basis. The estimate must be supported with
       accounting records, vendor invoices, bills of material, or other
       documentation that can support a per unit cost of the items being
       acquired. Any modification required for the new item being acquired
       should be estimated and supported.

       (b) Commercial items and catalog prices could be used to estimate
       material costs. Examples would include things like security cameras and
       doors. Copies of the catalogs used to estimate the material cost should be
       retained.

       (c) Vendor quotes can be used to estimate material costs. Vendor quotes
       from similar FAA contracts may be used to estimate material costs for the
       new acquisition.

       (d) Prices of some commodities may be regulated by law; in this case a
       copy of the law listing the particular commodity’s price would support the
       cost estimate.
                       (e) The Producer Price Index (PPI) is an example of a widely used
                       published index for escalation of material cost. The Bureau of Labor
                       Statistics’ PPI lists products by commodity groups and individual items.
                       Trade and industry publications are other possible sources for obtaining
                       appropriate data for material cost escalation.

               (9) Escalation. Future periods may be estimated by performing a trend analysis
               of past projects that are similar to the proposed work, or by using escalation
               factors. Escalation must be substantiated by a recognized source such as Bureau
               of Labor Statistics indices (Consumer Price Index or Producer Price Index).

               (10) Other Direct Costs (ODC). Other direct costs (ODC) are costs charged
               directly to the contract that have not been included in proposed material, direct
               labor, indirect costs, or any other category of costs. Examples of ODC include
               special tooling, travel expenses, reproduction costs, royalties, and federal excise
               taxes. All ODC should be listed in the IGCE, and supporting documentation
               retained and available for inspection by interested third parties.

               (11) Travel Costs. The program office must estimate the number of trips, the
               origin and destination for each trip, the length of stay, and the number of persons
               per trip before estimating the cost of travel. The purpose for the trips should be
               included in the IGCE narrative. Travel costs usually include cost of
               transportation, lodging, and meals and incidental expenses. The Federal Travel
               Regulation prescribed by the General Services Administration should be used to
               estimate lodging, meal and incidental expense, mileage for privately owned
               vehicles used for official travel, and so forth. Estimates for airfare and car rentals
               can be obtained using several travel web sites. (Note: make and retain copies of
               all source information used for travel estimates.)

               (12) Profit or Fee. Profit is the revenue in excess of the costs to perform a firm
               fixed price contract, and a fee is a flat charge paid in addition to costs on cost
               reimbursable contracts. The use of several forms may develop an estimated profit
               by using weighted-averages for different functions. These forms include DOT
               Form 4220 and DD Form 1547. A simpler approach is to apply a percentage to
               the total cost, excluding general and administrative (G&A) cost and any directly
               reimbursable items. The percentage will vary according to risk factors, market
               factors, and location.


3 Cost Accounting Standards Revised 7/2010

a. Applicability. Full or modified cost accounting standards (CAS) coverage, as appropriate,
applies to all cost-type contracts and subcontracts. Categories of contracts and subcontracts
exempt from all CAS requirements include:
       (1) Negotiated contracts and subcontracts not in excess of $650,000. For purposes
       of this arrangement, and order issued by one segment to another must be treated
       as a subcontract.

       (2) Contracts and subcontracts with small businesses.

       (3) Contracts and subcontracts with foreign governments or their agents or
       instrumentalities or (insofar as the requirements of CAS other than 9904.401 and
       99.402 are concerned) any contract or subcontract awarded to a foreign concern.

       (4) Contracts and subcontracts in which the price is set by law or regulation;

       (5) Firm fixed price and fixed-price with economic price adjustment (provided
       that the price adjustment is not based on actual costs incurred), time-and-
       materials, and labor-hour contracts and subcontracts for acquisition of commercial
       items.

       (6) Contracts or subcontracts of less the $7.5 million, provided that at the time of
       award the business unit of the contractor or subcontractor is not currently
       performing any CAS-covered contracts or subcontracts at $7.5 million or greater.

       (7) Contracts and subcontracts to be executed and performed outside the United
       States, its territories, and possessions; and

       (8) Firm-fixed-price contracts or subcontracts awarded on the basis of adequate
       price competition without submission of cost or pricing data.

b. Contract Requirements. A CAS-covered contract may be subject to either full or modified
CAS coverage.

c. Waiver. In some instances, contractors or subcontractors may refuse to accept all or part of the
requirements of AMS Clauses 3.2.3-2, Cost Accounting Standards, and 3.2.3-3, Disclosure and
Consistency of Cost Accounting Practices. If the CO determines that it is impractical to obtain
the materials, supplies, or services from any other source, the CO should prepare a request for
waiver.

d. Responsibilities.

       (1) The CO is responsible for determining when a proposed contract may require
       CAS coverage and for including the appropriate notice in the screening
       information request. The CO must then ensure that the offeror has made the
       required certifications and that required Disclosure Statements are submitted.

       (2) The CO should not award a CAS-covered contract until the CO has made a
       written determination that a required Disclosure Statement is adequate unless, in
       order to protect FAA interest, the CO waives the requirement for an adequacy
       determination before award. In this event, a determination of adequacy should be
       required as soon as possible after the award.

       (3) The cognizant auditor is responsible for conducting reviews of Disclosure
       Statements for adequacy and compliance.

       (4) The cognizant CO is responsible for determinations of adequacy and
       compliance of the Disclosure Statement.

e. Determinations.

       (1) Adequacy Determination. The contract auditor will conduct an initial review
       of a Disclosure Statement to ascertain whether it is current, accurate, and
       complete and will report the results to the cognizant CO. The CO will determine
       whether or not it adequately describes the offeror's cost accounting practices. If
       the CO identifies any areas of inadequacy, the CO should request a revised
       Disclosure Statement. If the Disclosure Statement is adequate, the CO should
       notify the offeror in writing, with copies to the auditor and CO. The notice of
       adequacy should state that a disclosed practice will not, by virtue of such
       disclosure, be considered an approved practice for pricing proposals or
       accumulating and reporting contract performance cost data. Generally, the CO
       should furnish the contractor notification of adequacy or inadequacy within 30
       days after the Disclosure Statement has been received by the CO.

       (2) Compliance Determination. After the notification of adequacy, the auditor
       must conduct a detailed compliance review to determine whether or not the
       disclosed practices comply with cost principles and the CAS and will advise the
       CO of the results. The CO should take action regarding noncompliance with
       CAS. The CO may require a revised Disclosure Statement and adjustment of the
       prime contract price or cost allowance. Noncompliance with cost principles
       should be processed separately, in accordance with normal administrative
       practices.

f. Subcontractor Disclosure Statements.

       (1) When FAA requires determinations of adequacy or inadequacy, the CO
       cognizant of the subcontractor will provide such determination to the CO
       cognizant of the prime contractor or next higher tier subcontractor. CO's
       cognizant of higher tier subcontractors or prime contractors must not reverse the
       determination of the CO cognizant of the subcontractor.

       (2) The agency head may determine that it is practical to secure the Disclosure
       Statement, although submission is required, and authorize contract award without
       obtaining the Statement. The agency head must, within 30 days of having done
       so, submit a report to the Cost Accounting Standards Board setting forth all
       material facts. This authority may not be delegated.
g. CAS Administration. The cognizant CO will perform CAS administration for all contracts in a
business unit notwithstanding retention of other administration functions by another CO. Within
30 days after the award of any new contract or subcontract subject to CAS, the CO, contractor, or
subcontractor making the award should request the cognizant CO to perform administration for
CAS matters.

h. Changes to Disclosed or Established Cost Accounting Practices. Adjustments to contracts and
withholding amounts payable for CAS noncompliance, new standards, or voluntary changes are
required only if the amounts involved are material. In determining whether amounts of cost are
material or immaterial, the following criteria will be considered by the CO where appropriate; no
one criterion is necessarily determinative:

       (1) The absolute dollar amount involved. The larger the dollar amount, the more
       likely that it will be material.

       (2) The amount of contract cost compared with the amount under consideration.
       The larger the proportion of the amount under consideration to contract cost, the
       more likely it is to be material.

       (3) The relationship between a cost item and a cost objective. Direct cost items,
       especially if the amounts are themselves part of a base for allocation of indirect
       costs, will normally have more impact than the same amount of indirect costs.

       (4) The impact on Government funding. Changes in accounting treatment will
       have more impact if they influence the distribution of costs between Government
       and non-Government cost objectives than if all cost objectives have Government
       financial support.

       (5) The cumulative impact of individually immaterial items. It is appropriate to
       consider whether such impacts:

              (a) Tend to offset one another; or

              (b) Tend to be in the same direction and hence to accumulate into a
              material amount.

       (6) The cost of administrative processing of the price adjustment modification
       must be considered. If the cost to process exceeds the amount to be recovered, it
       is less likely the amount will be material.

The CO may forego action to require that a cost impact proposal be submitted or to adjust
contracts, if the CO determines the amount involved is immaterial. However, in the case of
noncompliance issues, the CO should inform the contractor that:

       (1) FAA reserves the right to make appropriate contract adjustments if, in the future, the
       CO determines that the cost impact has become material; and
       (2) The contractor is not excused from the obligation to comply with the applicable
       Standard or rules and regulations involved.

i. Equitable Adjustments for New or Modified Standards.

       (1) New or Modified Standards.

              (a) AMS clause 3.2.3-1, Cost Accounting Standards Notices and Certification,
              requires offerors to state whether or not the award of the contemplated contract
              would require a change to established cost accounting practices affecting existing
              contracts and subcontracts. The CO must ensure that the contractor's response to
              the notice is made known to the CO.

              (b) Contracts and subcontracts containing AMS clause 3.2.3-2, Cost Accounting
              Standards, may require equitable adjustments to comply with new or modified
              CAS. Such adjustments are limited to contracts and subcontracts awarded before
              the effective date of each new or modified standard. A new or modified standard
              becomes applicable prospectively to these contracts and subcontracts when a new
              contract or subcontract containing AMS clause 3.2.3-2, Cost Accounting
              Standards. is awarded on or after the effective date of the new or modified
              standard.

              (c) COs should encourage contractors to submit to the CO any change in
              accounting practice in anticipation of complying with a new or modified standard
              as soon as practical after the new or modified Standard has been promulgated by
              the CASB.

       (2) Accounting Changes.

              (a) AMS clause 3.2.3-5, Administration of Cost Accounting Standards. requires
              the contractor to submit a description of any change in cost accounting practices
              required to comply with a new or modified CAS within 60 days (or other
              mutually agreed to date) after award of a contract requiring the change.

              (b) The CO will review the proposed change concurrently for adequacy and
              compliance. If the description of the change meets both tests, the CO will notify
              the contractor and request submission of a cost impact proposal.

       (3) Contract Price Adjustments.

              (a) The CO should promptly analyze the cost impact proposal with the assistance
              of the auditor, determine the impact, and negotiate the contract price adjustment
              on behalf of all Government agencies. The CO should invite COs from other
              agencies to participate in negotiations of adjustments when the price of any of
              their contracts may be increased or decreased by $10,000 or more. At the
              conclusion of negotiations, the CO will:
                    (i) Execute supplemental agreements to contracts of the CO's own
                    agency (and, if additional funds are required, request them from the
                    appropriate CO);

                    (ii) Prepare a negotiation memorandum and send copies to cognizant
                    auditors and COs of other agencies having prime contracts affected by the
                    negotiation (those agencies must execute supplemental agreements in the
                    amounts negotiated); and

                    (iii) Furnish copies of the memorandum indicating the effect on costs to
                    the CO of the next higher tier subcontractor or prime contractor, as
                    appropriate, if a subcontract is to be adjusted. This memorandum will
                    serve as the basis for negotiation between the subcontractor and the next
                    higher tier subcontractor or prime contractor and for execution of a
                    supplemental agreement to the subcontract.

             (b) If the parties fail to agree on the cost or price adjustment, the CO may make a
             unilateral adjustment, subject to contractor appeal.

      (4) Remedies for Contractor Failure to Make Required Submissions.

             (a) If the contractor does not submit the accounting change description or the
             general dollar magnitude of the change or cost impact proposal (in the form and
             manner specified), the CO, with the assistance of the auditor, must estimate the
             general dollar magnitude of the cost impact on CAS-covered contracts and
             subcontracts. The CO may then withhold an amount not to exceed 10 percent of
             each subsequent amount determined payable related to the contractor's CAS-
             covered prime contracts, up to the estimated general dollar magnitude of the cost
             impact, until the required submission is furnished by the contractor.

             (b) If the contractor has not submitted the cost impact proposal before the total
             withheld amount reaches the estimated general dollar magnitude and the CO
             determines that an adjustment is required, the CO must request the contractor to
             agree to the cost or price adjustment. The contractor must also be advised that in
             the event no agreement on the cost or price adjustment is reached within 20 days,
             the CO may make a unilateral adjustment, subject to contractor appeal.

j. Noncompliance with CAS Requirements.

      (1) Determination of Noncompliance.

             (a) Within 15 days of the receipt of a report of alleged noncompliance from the
             auditor, the CO must make an initial finding of compliance or noncompliance and
             advise the auditor.
       (b) If an initial finding of noncompliance is made, the CO must immediately
       notify the contractor in writing of the exact nature of the noncompliance and
       allow the contractor 60 days within which to agree or to submit reasons why the
       existing practices are considered to be in compliance.

       (c) If the contractor agrees with the initial finding of noncompliance, the CO must
       review the contractor submissions required by paragraph (a) of AMS clause 3.2.3-
       5, Administration of Cost Accounting Standards.

       (d) If the contractor disagrees with the initial noncompliance finding, the CO must
       review the reasons why the contractor considers the existing practices to be in
       compliance and make a determination of compliance or noncompliance. If the
       CO determines that the contractor's practices are in noncompliance, a written
       explanation must be provided as to why the CO disagrees with the contractor's
       rationale. The CO must notify the contractor and the auditor in writing of the
       determination. If the CO makes a determination of noncompliance, the
       procedures in (b) through (d), as appropriate, must be followed.

(2) Accounting Changes.

       (a) AMS Clause 3.2.3-5, Administration of Cost Accounting Standards, requires
       the contractor to submit a description of any cost accounting practice change
       needed to correct a noncompliance.

       (b) The CO must review the proposed change concurrently for adequacy and
       compliance. If the description of the change meets both tests, the CO must notify
       the contractor and request submission of a cost impact proposal.

(3) Contract Price Adjustments.

       (a) The CO must request that the contractor submit a cost impact proposal within
       the time specified in AMS Clause 3.2.3-5, Administration of Cost Accounting
       Standards.

       (b) Upon receipt of the cost impact proposal, the CO must then follow the
       procedures in subparagraph (3) (a) under above paragraph j. "Equitable
       Adjustments for New or Modified Standards". In accordance with the AMS
       Clause 3.2.3-2, Cost Accounting Standards, the CO must include and separately
       identify, as part of the computation of the contract price adjustment(s), applicable
       interest on any increased costs paid to the contractor as a result of the
       noncompliance. Interest must be computed from the date of overpayment to the
       time the adjustment is effected. If the costs were incurred and paid evenly over
       the fiscal years during which the noncompliance occurred, then the midpoint of
       the period in which the noncompliance began may be considered the baseline for
       the computation of interest. An alternate equitable method should be used if the
       costs were not incurred and paid evenly over the fiscal years during which the
              noncompliance occurred. Interest should be computed pursuant to AMS Clause
              3.3.1-9, Interest.

       (4) Remedies for Contractor Failure to Make Required Submissions.

              (a) If the contractor does not submit the accounting change description or the
              general dollar magnitude of the change or cost impact proposal (in the form and
              manner specified), the CO, with the assistance of the auditor, must estimate the
              general dollar magnitude of the cost impact on CAS-covered contracts and
              subcontracts. The CO may then withhold an amount not to exceed 10 percent of
              each subsequent amount determined payable related to the contractor's CAS-
              covered prime contracts, up to the estimated general dollar magnitude of the cost
              impact until the required submission is furnished by the contractor.

              (b) If the contractor has not submitted the cost impact proposal before the total
              withheld amount reaches the estimated general dollar magnitude and the CO
              determines that an adjustment is required, the CO must notify the contractor and
              request agreement as to the cost or price adjustment together with any applicable
              interest. The contractor must also be advised that in the event no agreement on
              the cost or price adjustment is reached within 20 days, the CO may make a
              unilateral adjustment, subject to contractor appeal.

              (c) If the CO determines that there is no material increase in costs as a result of
              the noncompliance, the CO must notify the contractor in writing that the
              contractor is in noncompliance, that corrective action should be taken, and that if
              such noncompliance subsequently results in materially increased costs to the
              FAA, the provisions of AMS Clause 3.2.3-2, Cost Accounting Standards and/or
              AMS Clause 3.2.3-3, Disclosure and Consistency of Cost Accounting Practices,
              will be enforced.

k. Voluntary Changes.

       (1) General.

              (a) The contractor may voluntarily change its disclosed or established cost
              accounting practices.

              (b) The contract price may be adjusted for voluntary changes. However,
              increased costs resulting from a voluntary change may be allowed only if the CO
              determines that the change is desirable and not detrimental to the interest of FAA.

       (2) Accounting Changes.

              (a) AMS Clause 3.2.3-5, Administration of Cost Accounting Standards, requires
              the contractor to notify the CO and submit a description of any voluntary cost
              accounting practice change not less than 60 days (or such other date as may be
              mutually agreed to) before implementation of the voluntary change.

              (b) The CO must review the proposed change concurrently for adequacy and
              compliance. If the description of the change meets both tests, the CO must notify
              the contractor and request submission of a cost impact proposal.

       (3) Contract Price Adjustments.

              (a) With the assistance of the auditor, the CO must promptly analyze the cost
              impact proposal to determine whether or not the proposed change will result in
              increased costs being paid by FAA. The CO must consider all of the contractor's
              affected CAS-covered contracts and subcontracts, but any cost changes to higher-
              tier subcontracts or contracts of other contractors over and above the cost of the
              subcontract adjustment must not be considered.

              (b) The CO must then follow the procedures in above subparagraph j, "Equitable
              Adjustments for New or Modified Standards."

       (4) Remedies for Contractor Failure to Make Required Submissions.

              (a) If the contractor does not submit the accounting change description or the
              general dollar magnitude of the change or cost impact proposal (in the form and
              manner specified), the CO, with the assistance of the auditor, must estimate the
              general dollar magnitude of the cost impact on CAS-covered contracts and
              subcontracts. The CO may then withhold an amount not to exceed 10 percent of
              each subsequent amount determined payable related to the contractor's CAS-
              covered prime contracts up to the estimated general dollar magnitude of the cost
              impact, until the required submission is furnished by the contractor.

              (b) If the contractor has not submitted the cost impact proposal before the total
              withheld amount reaches the estimated general dollar magnitude and the CO
              determines that an adjustment is appropriate, the CO must request the contractor
              to agree to the cost or price adjustment. The contractor must also be advised that,
              in the event no agreement on the cost or price adjustment is reached within 20
              days, the CO may make a unilateral adjustment subject to contractor appeal.

l. Subcontract Administration. When a negotiated CAS price adjustment or a determination of
noncompliance is required at the subcontract level, the CO cognizant of the subcontractor must
make the determination and advise the CO cognizant of the prime contractor or next higher tier
subcontractor of his decision. COs cognizant of higher tier subcontractors or prime contractors
must not reverse the determination of the CO cognizant of the subcontractor.


B Clauses
view contract clauses


C Forms

view procurement forms


D Appendix Revised 10/2007

1 Appendix 1- Instructions for Submitting Cost/Price Proposals Revised 7/2010

              INSTRUCTION FOR SUBMITTING COST/PRICE PROPOSALS

             WHEN CERTIFIED COST OR PRICING DATA ARE REQUIRED

Note 1. There is a clear distinction between submitting certified cost or pricing data and merely
making available books, records, and other documents without identification. The requirement
for submission of certified cost or pricing data is met when all accurate cost or pricing data
reasonably available to the offeror have been submitted, either actually or by specific
identification, to the Contracting Officer (CO) or an authorized representative. As later
information comes into the offeror’s possession, it should be submitted promptly to the CO in a
manner that clearly shows how the information relates to the offeror's price proposal. The
requirement for submission of certified cost or pricing data continues up to the time of agreement
on price, or an earlier date agreed upon between the parties if applicable.

Note 2. By submitting the offeror’s proposal, the offeror grants the CO or an authorized
representative the right to examine records that formed the basis for the pricing proposal. That
examination can take place at any time before award. It may include those books, records,
documents, and other types of factual information (regardless of form or whether the information
is specifically referenced or included in the proposal as the basis for pricing) that will permit an
adequate evaluation of the proposed price.

I. GENERAL INSTRUCTIONS

A. The offeror must provide the following information on the first page of the offeror’s pricing
proposal:

        (1) Solicitation, contract, and/or modification number;

        (2) Name and address of offeror;

        (3) Name and telephone number of point of contact;

        (4) Name of contract administration office (if available);
       (5) Type of contract action (that is, new contract, change order, price
       revision/redetermination, letter contract, unpriced order, or other);

       (6) Proposed cost; profit or fee; and total;

       (7) Whether the offeror will require the use of Government property in the performance
       of the contract, and, if so, what property;

       (8) Whether the offeror’s organization is subject to cost accounting standards; whether
       the offeror’s organization has submitted a CASB Disclosure Statement, and if it has been
       determined adequate; whether the offeror have been notified that the offeror are or may
       be in noncompliance with the offeror’s Disclosure Statement or CAS, and, if yes, an
       explanation; whether any aspect of this proposal is inconsistent with the offeror’s
       disclosed practices or applicable CAS, and, if so, an explanation; and whether the
       proposal is consistent with the offeror’s established estimating and accounting principles
       and procedures and FAA Cost Principles, and, if not, an explanation;

       (9) The following statement:

       "This proposal reflects our estimates and/or actual costs as of this date and conforms to
       the instructions contained in the Appendix to Toolbox Section 3.2.3, ‘Cost and Price
       Methodology." By submitting this proposal, we grant the CO and authorized
       representative(s) the right to examine, at any time before award, those records, which
       include books, documents, accounting procedures and practices, and other data,
       regardless of type and form or whether such supporting information is specifically
       referenced or included in the proposal as the basis for pricing, that will permit an
       adequate evaluation of the proposed price."

       (10) Date of submission; and

       (11) Name, title and signature of authorized representative.

B. In submitting the offeror’s proposal, the offeror must include an index, appropriately
referenced, of all the cost or pricing data and information accompanying or identified in the
proposal. In addition, the offeror must annotate any future additions and/or revisions, up to the
date of agreement on price, or an earlier date agreed upon by the parties, on a supplemental
index.

C. As part of the specific information required, the offeror must submit, with the offeror’s
proposal, certified cost or pricing data (that is, data that are verifiable and factual and otherwise
as defined in FAA AMS Appendix C. The offeror must clearly identify on the offeror’s cover
sheet that certified cost or pricing data are included as part of the proposal. In addition, the
offeror must submit with the offeror’s proposal any information reasonably required to explain
the offeror’s estimating process, including
       (1) The judgmental factors applied and the mathematical or other methods used in the
       estimate, including those used in projecting from known data; and

       (2) The nature and amount of any contingencies included in the proposed price.

D. The offeror must show the relationship between contract line item prices and the total contract
price. The offeror must attach cost-element breakdowns for each proposed line item, using the
appropriate format prescribed in the "Formats for Submission of Line Item Summaries" section
of this table. The offeror must furnish supporting breakdowns for each cost element, consistent
with the offeror’s cost accounting system.

E. When more than one contract line item is proposed, the offeror must also provide summary
total amounts covering all line items for each element of cost.

F. Whenever the offeror have incurred costs for work performed before submission of a
proposal, the offeror must identify those costs in the offeror’s cost/price proposal.

G. If the offeror has reached an agreement with Government representatives on use of forward
pricing rates/factors, identify the agreement, include a copy, and describe its nature.

H. As soon as practicable after final agreement on price or an earlier date agreed to by the
parties, but before the award resulting from the proposal the offeror must submit a Certificate of
Current Cost or Pricing Data as follows:

(1) Certificate



                  CERTIFICATE OF CURRENT COST OR PRICING DATA



This is to certify that, to the best of my knowledge and belief, the cost or pricing data submitted,
either actually or by specific identification in writing, to the CO or to the CO’s representative in
support of [*] are accurate, complete, and current as of [**]. This certification includes the cost
or pricing data supporting any advance agreements and forward pricing rate agreements between
the offeror and the Government that are part of the proposal.

[Offeror insert the following information.]

Firm _________________________________________

Signature ____________________________________

Name ________________________________________
Title ________________________________________

Date of execution [***___________________________]

*Offeror identify the proposal, request for price adjustment, or other submission involved, giving
the appropriate identifying number (e.g., SIR No.)

** Offeror insert the day, month, and year when price negotiations were concluded and price
agreement was reached or, if applicable, an earlier date agreed upon between the parties that is
as close as practicable to the date of agreement on price.

*** Offeror insert the day, month, and year of signing, which should be as close as practicable
to the date when the price negotiations were concluded and the contract price was agreed to.

                                        (End of certificate)

(2) The certificate does not constitute a representation as to the accuracy of the offeror's
judgment on the estimate of future costs or projections. It applies to the data upon which the
judgment or estimate was based. This distinction between fact and judgment should be clearly
understood. If the offeror had information reasonably available at the time of agreement showing
that the negotiated price was not based on accurate, complete, and current data, the offeror's
responsibility is not limited by any lack of personal knowledge of the information on the part of
its negotiators.

(3) The CO and offeror are encouraged to reach a prior agreement on criteria for establishing
closing or cutoff dates when appropriate in order to minimize delays associated with proposal
updates. Closing or cutoff dates should be included as part of the data submitted with the
proposal and, before agreement on price, data should be updated by the offeror to the latest
closing or cutoff dates for which the data are available. Use of cutoff dates coinciding with
reports is acceptable, as certain data may not be reasonably available before normal periodic
closing dates (e.g., actual indirect costs). Data within the offeror's or a subcontractor's
organization on matters significant to offeror management and to FAA will be treated as
reasonably available. What is significant depends upon the circumstances of each acquisition.

(4) Possession of a Certificate of Current Cost or Pricing Data is not a substitute for examining
and analyzing the offeror's proposal.

(5) If certified cost or pricing data are requested by FAA and submitted by an offeror, but an
exception is later found to apply, the data must not be considered certified cost or pricing data
and must not be certified in accordance with this subsection.

II. COST ELEMENTS

Depending on the offeror’s system, the offeror must provide breakdowns for the following basic
cost elements, as applicable:
A. Materials and services. Provide a consolidated priced summary of individual material
quantities included in the various tasks, orders, or contract line items being proposed and the
basis for pricing (vendor quotes, invoice prices, etc.). Include raw materials, parts, components,
assemblies, and services to be produced or performed by others. For all items proposed, identify
the item and show the source, quantity, and price. Conduct price analyses of all subcontractor
proposals. Conduct cost analyses for all subcontracts when certified cost or pricing data are
submitted by the subcontractor. Include these analyses as part of the offeror’s own certified cost
or pricing data submissions. Submit the subcontractor certified cost or pricing data as part of the
offeror’s own certified cost or pricing data as required in subparagraph IIA (2) below. These
requirements also apply to all subcontractors if required to submit certified cost or pricing data.

       (1) Adequate Price Competition. Provide data showing the degree of competition and the
       basis for establishing the source and reasonableness of price. For interorganizational
       transfers priced at other than the cost of comparable competitive commercial work of the
       division, subsidiary, or affiliate of the offeror, explain the pricing method.

       (2) All Other. Obtain certified cost or pricing data from prospective sources (i.e.,
       adequate price competition, commercial items, prices set by law or regulation or waiver).
       Also provide data showing the basis for establishing source and reasonableness of price.
       In addition, provide a summary of the offeror’s cost analysis and a copy of certified cost
       or pricing data submitted by the prospective source in support of each subcontract or
       purchase order that is the lower of either $10,000,000 or more, or both more than the
       pertinent certified cost or pricing data threshold and more than 10 percent of the prime
       offeror's proposed price. The CO may require the offeror to submit certified cost or
       pricing data in support of proposals in lower amounts. Subcontractor certified cost or
       pricing data must be accurate, complete and current as of the date of final price
       agreement, or an earlier date agreed upon by the parties, given on the prime offeror's
       Certificate of Current Cost or Pricing Data. The prime offeror is responsible for updating
       a prospective subcontractor's data. For standard commercial items fabricated by the
       offeror that are generally stocked in inventory, provide a separate cost breakdown, if
       priced based on cost. For interorganizational transfers priced at cost, provide a separate
       breakdown of cost elements. Analyze the cost or pricing data and submit the results of the
       offeror’s analysis of the prospective source's proposal. When submission of a prospective
       source's certified cost or pricing data is required as described in this paragraph, it must be
       included along with the offeror’s own certified cost or pricing data submission, as part of
       the offeror’s own certified cost or pricing data. The offeror must also submit any other
       certified cost or pricing data obtained from a subcontractor, either actually or by specific
       identification, along with the results of any analysis performed on that data.

B. Direct Labor. Provide a time-phased (e.g., monthly, quarterly, etc.) breakdown of labor hours,
rates, and cost by appropriate category, and furnish bases for estimates.

C. Indirect Costs. Indicate how the offeror have computed and applied the offeror’s indirect
costs, including cost breakdowns. Show trends and budgetary data to provide a basis for
evaluating the reasonableness of proposed rates. Indicate the rates used and provide an
appropriate explanation.
D. Other Costs. List all other costs not otherwise included in the categories described above (e.g.,
special tooling, travel, computer and consultant services, preservation, packaging and packing,
spoilage and rework, and Federal excise tax on finished articles) and provide bases for pricing.

E. Royalties. If royalties exceed $1,500, the offeror must provide the following information on a
separate page for each separate royalty or license fee:

       (1) Name and address of licensor.

       (2) Date of license agreement.

       (3) Patent numbers.

       (4) Patent application serial numbers, or other basis on which the royalty is payable.

       (5) Brief description (including any part or model numbers of each contract item or
       component on which the royalty is payable).

       (6) Percentage or dollar rate of royalty per unit.

       (7) Unit price of contract item.

       (8) Number of units.

       (9) Total dollar amount of royalties.

       (10) If specifically requested by the CO, a copy of the current license agreement and
       identification of applicable claims of specific patents.

F. Facilities Capital Cost of Money. When the offeror elects to claim facilities capital cost of
money as an allowable cost, the offeror must submit form "Contract Facilities Capital Cost of
Money." (see Template 32 in the FAA Procurement Forms section of the Procurement Toolbox).
The offeror must show the calculation of the proposed amount.

III. FORMATS FOR SUBMISSION OF LINE ITEM SUMMARIES

A. New Contracts (including letter contracts)

                                  (2)                       (3)
          (1)                                                                     (4)


                             PROPOSED                PROPOSED
                             CONTRACT                CONTRACT
  COST ELEMENTS                                                              REFERENCE
                          ESTIMATE-TOTAL           ESTIMATE-UNIT
                               COST                    COST
Column Instruction

(1) Enter appropriate cost elements.

(2) Enter those necessary and reasonable costs that, in the offeror’s judgment, will properly be
incurred in efficient contract performance. When any of the costs in this column have already
been incurred (e.g., under a letter contract), describe them on an attached supporting page. When
preproduction or startup costs are significant, or when specifically requested to do so by the CO,
provide a full identification and explanation of them.

(3) Optional, unless required by the CO.

(4) Identify the attachment in which the information supporting the specific cost element may be
found. (Attach separate pages as necessary.)

B. Change Orders, Modifications, and Claims.

                                (3)
                  (2)
                                              (4)           (5)
     (1)                                                                  (6)
                            COST OF                                                     (7)
          ESTIMATED
                            DELETED  NET COST            COST OF
   COST    COST OF                                                    NET COST
                             WORK     TO BE               WORK                 REFERENCE
 ELEMENTS ALL WORK                                                   OF CHANGE
                            ALREADY  DELETED              ADDED
          COMPLETED
                           PERFORMED



Column Instructions

(1) Enter appropriate cost elements.

(2) Include the current estimates of what the cost would have been to complete the deleted work
not yet performed (not the original proposal estimates), and the cost of deleted work already
performed.

(3) Include the incurred cost of deleted work already performed, using actuals incurred if
possible, or, if actuals are not available, estimates from the contractor’s accounting records.
Attach a detailed inventory of work, materials, parts, components, and hardware already
purchased, manufactured, or performed and deleted by the change, indicating the cost and
proposed disposition of each line item. Also, if the contractor desires to retain these items or any
portion of them, indicate the amount offered for them.
(4) Enter the net cost to be deleted, which is the estimated cost of all deleted work less the cost of
deleted work already performed. Column (2) minus Column (3) equals Column (4).

(5) Enter the contractor’s estimate for cost of work added by the change. When nonrecurring
costs are significant, or when specifically requested to do so by the CO, provide a full
identification and explanation of them. When any of the costs in this column have already been
incurred, describe them on an attached a supporting schedule.

(6) Enter the net cost of change, which is the cost of work added, less the net cost to be deleted.
Column (5) minus Column (4) equals Column (6). When this result is negative, place the amount
in parentheses.

(7) Identify the attachment in which the information supporting the specific cost element may be
found. (Attach separate pages as necessary.)


2 Appendix 2 - Template for Detailed Independent Government Cost Estimate Added 10/2007

Detailed Independent Government Cost Estimate

Independent Government Cost Estimate for _______________________

Prepared by: ________________________

Office title and phone: ________________________

Date: ________________________

Direct Labor by Category                   Hours             Hourly Rate          Total
                                                        X                    =
                                                        X                    =
                                                        X                    =
                                                        X                    =
                                                                       Subtotal
Labor Overhead ( ___ %) of labor
Total Labor (Direct Labor + Labor Overhead)
Direct Material
       Purchased Parts and Supplies
       Subcontracts
       Other Material
Total Material
Other Direct Costs
       Travel
       Consultants
       Special Equipment
      Other
Total Other Direct Cost
TOTAL DIRECT COST = (Labor + Material + Other Direct Cost)
GENERAL AND ADMINISTRATIVE EXPENSE = ( ___%) X Total Direct Cost
                                                             Subtotal
FEE/PROFIT = ( ___ %) X (Direct Cost + General and Administrative)
                                            TOTAL ESTIMATED COST


Narrative for basis of estimate attached
T3.2.4 - Types of Contracts Revised 7/2009


A Types of Contracts Revised 7/2007

1 General Considerations Added 7/2007

a. The Contracting Officer (CO) determines the type of contract. A variety of factors influence
the CO’s decision, such as nature and complexity of the requirement, degree to which
requirements can be described, performance period, need for incentives, urgency, market
conditions, industry practices, or procurement history.

b. Circumstances may change during implementation of a large program, a series of contracts, or
a single long-term contract, and a different contract type may be appropriate in later periods than
that used at the outset. Also, a combination of contract types may be appropriate for different
aspects of a requirement under one contract award.

c. The CO uses sound judgment when selecting a contract type. Depending on the
circumstances, it may be a matter for communication with vendors because contract price is
closely related to contract type. The CO's objective should be to choose a contract type and price
that will result in reasonable contractor risk and ensure efficient and economical contractor
performance.

d. Performance requirements must be realistic, manageable, and within the control of the parties
to the contract. The procurement team (CO, program official, legal counsel, and other staff)
should, to the extent possible, assess and discuss contract performance risks and ensure contract
requirements and terms are clear. Contract terms must be reasonable to both FAA and the
contractor.


2 Fixed-Price Revised 7/2007

a. General. Fixed-price types of contracts provide for a firm price or, in appropriate cases, an
adjustable price. Fixed-price contracts providing for an adjustable price may include a ceiling
price, a target price (including target cost), or both. Unless otherwise specified in the contract,
the ceiling price or target price is subject to adjustment only by operation of contract clauses
providing for equitable adjustment or other revision of the contract price under stated
circumstances.

b. Firm Fixed-Price.

        (1) Description:

                 (a) Provides for a price that is not subject to change regardless of the actual costs
                 incurred by the contractor after award.
              (b) Places maximum risk upon the contractor and full responsibility for all costs
              and resulting profit or loss with maximum incentive to control costs and perform
              effectively.

              (c) Imposes minimum administrative burden upon the contracting parties.

       (2) Use When:

              (a) Performance risk can be reasonably predicted or where risk is minimal.

              (b) For commercial items or commercial-type products or other supplies or
              services on the basis of reasonably definite functional or detailed specifications.

              (c) Available cost or pricing information permits realistic evaluation of probable
              costs of performance or the CO can establish fair and reasonable prices at the
              outset.

              (d) The contractor is willing to accept a firm fixed price representing assumption
              of the risks involved.

       (3) Considerations:

              (a) Contractor is responsible for cost control and associated risks.

              (b) Careful evaluation of project requirements and the Offeror’s price proposal
              shall be made to ensure a meeting of the minds and ensure price does not include
              excessive allowance for risk.

c. Fixed-Price with Economic Price Adjustment.

       (1) Description:

       Same as fixed price, except provides for an upward or downward revision of the stated
       contract price based on the occurrence of specific conditions specified in the contract.
       Adjustments are of three general types:

              (a) Established prices. Increases or decreases from an agreed upon level in
              published or otherwise established prices of specific items or the contract end
              items. Normally restricted to industry-wide contingencies.

              (b) Actual costs of labor or material. Increases or decreases in specified costs of
              labor or material that the contractor actually experiences during contract
              performance. Should be limited to contingencies beyond the contractor’s control.
               (c) Cost indexes of labor or material. Increases or decreases in specified costs of
               labor or material cost standards or indexes that are specifically identified in the
               contract.

       (2) Use When:

       There is considerable doubt concerning the stability of the market or labor conditions that
       will exist during an extended contract period (i.e., during periods of high or significant
       fluctuations in inflation), and where the performance period is greater than one year.

       (3) Considerations:

               (a) Risk for contractor reduced.

               (b) Important to ensure that the contingency (typically an index published by the
               Bureau of Labor Statistics) is a reliable indicator of the contractor's probable
               changes in cost. For example, the Employment Cost Index (ECI) is generally
               preferable to the Consumer Price Index (CPI-U) if labor costs are the primary
               component of the contractor's price.

               (c) Should not be used unless it is necessary either to protect the contractor and
               the FAA against significant fluctuations in labor or material costs.

               (d) In contracts that do not require submission of cost or pricing data, the CO
               should obtain adequate information to establish the base level from which an
               adjustment may be made and may require verification of data submitted.

d. Firm Fixed-Price, Level-of-Effort.

       (1) Description:

               (a) Requires a contractor to provide a specified level of effort, over a stated period
               of time, for work that can be stated only in general terms, and the FAA pays the
               contractor a fixed dollar amount.

               (b) Suitable for investigation or study in a specific research and development area.
               The output of the contract is usually a report showing the results achieved through
               application of the required level of effort.

       (2) Use When:

               (a) The work required cannot otherwise be clearly defined.

               (b) The required level of effort is identified and agreed upon in advance.

       (3) Considerations:
               (a) There is reasonable assurance that the intended result cannot be achieved by
               expending less than the stipulated effort.

               (b) Payment is based on the effort expended rather than the results achieved.

e. Fixed-Price Incentive.

       (1) Description:

               (a) Provides for adjusting profit and establishing the final contract price by
               application of a formula based on the relationship of total final negotiated cost to
               total target cost.

               (b) The final price is subject to a price ceiling, negotiated at the outset. The two
               forms of fixed-price incentive contracts are firm target and successive targets.

       (2) Use When:

               (a) A firm-fixed price is not suitable.

               (b) The nature of the supplies or services being acquired and other circumstances
               of the acquisition are such that the contractor’s assumption of a degree of cost
               responsibility will provide a positive profit incentive for effective cost control and
               performance.

               (c) The performance requirements provide a reasonable opportunity for the
               incentives to have a meaningful impact on the contractor’s management of the
               work, if the contract also includes incentives on technical performance and/or
               delivery.

               (d) Billing prices are established as an interim basis for payment. These billing
               prices may be adjusted, within the ceiling limits, upon request of either party to
               the contract, when it becomes apparent that the final negotiated cost will be
               substantially different from the target cost.

       (3) Considerations:

               (a) Places maximum risk upon the contractor and full responsibility for all costs
               and resulting profit or loss with maximum incentive to control costs and perform
               effectively.

               (b) The final price is subject to a price ceiling, negotiated at the outset. See
               guidance on Firm Target and Successive Target contracts for additional
               considerations.

f. Fixed-Price Incentive (Firm Target).
       (1) Description:

              (a) Specifies a target cost, a target profit, a price ceiling (but not a profit ceiling or
              floor), and a profit adjustment formula. These elements are negotiated at the
              outset.

              (b) Price ceiling is the maximum that may be paid to the contractor, except for
              any adjustment under other contract clauses.

              (c) When performance is completed, the parties negotiate the final cost, and the
              final price is established by applying the formula.

       (2) Use When:

              (a) The contractor’s accounting system is adequate for providing data to support
              negotiation of final cost and incentive price revision.

              (b) Adequate cost or pricing information for establishing reasonable firm targets
              is available at the time of initial contract negotiation.

       (3) Considerations:

              (a) Profit varies inversely with the cost; therefore this contract type provides a
              positive, calculable profit incentive for the contractor to control costs.

              (b) If the final negotiated cost exceeds the price ceiling, the contractor absorbs the
              difference as a loss.

              (c) The CO should specify in the contract schedule the target cost, target profit,
              and target price for each item subject to incentive price revision.

g. Fixed-Price Incentive (Successive Targets).

       (1) Description:

              (a) Specifies the following elements, all of which are negotiated at the outset:

                       (i) Initial target cost;

                       (ii) Initial target profit;

                       (iii) Initial profit adjustment formula;

                       (iv) The production point; and

                       (v) A ceiling price.
              (b) The profit adjustment formula to be used for establishing the firm target profit
              includes a ceiling and floor for the firm target profit.

       (2) Use When:

              (a) Available cost or pricing information is not sufficient to permit the negotiation
              of a realistic firm target cost and profit before award.

              (b) Sufficient information is available to permit negotiation of initial targets.

              (c) There is reasonable assurance that additional reliable information will be
              available at an early point in the contract performance so as to permit negotiation
              of either a firm-fixed price or firm targets and a formula for establishing final
              profit and price that will provide a fair and reasonable incentive.

              (d) The contractor’s accounting system is adequate for providing data for
              negotiating firm targets and a realistic profit adjustment formula, and negotiation
              of final costs.

              (e) Cost or pricing information adequate for establishing a reasonable firm target
              cost is reasonably expected to be available at an early point in contract
              performance.

       (3) Considerations:

              (a) Initial profit adjustment formula normally provides for a lesser degree of
              contractor cost responsibility than would a formula for establishing final profit
              and price.

              (b) A ceiling price is the maximum that may be paid to the contractor, except for
              any adjustment under other contract clauses.

              (c) When the specified production point is reached, the parties negotiate the firm
              target cost giving consideration to cost experience under the contract and other
              pertinent factors. The firm target profit is established by the stated formula. The
              parties may then negotiate a firm-fixed price, using the firm target cost plus the
              firm target profit as a guide; OR negotiate a formula for establishing the final
              price using the firm target cost and firm target profit. The final cost is then
              negotiated at completion, and the final profit is established by the formula, as
              under the fixed-price (firm target) contract.

h. Fixed-Price Award Fee.

       (1) Description:
               (a) Provides for a price not subject to any adjustment on the basis of the
               contractor’s actual costs in performing the contract and for a fee consisting of an
               award amount that the contractor may earn in whole, in part, or not at all during
               performance.

               (b) Award fee is sufficient to provide motivation for excellence in such areas as
               quality, timeliness, etc.

               (c) The amount of the award fee to be paid is determined by the FAA’s
               judgmental evaluation of the contractor’s performance in terms of the
               discriminators stated in the contract. This determination is made unilaterally by
               the FAA and is not subject to the "Disputes" clause.

       (2) Use When:

               (a) The work can be sufficiently defined to permit the use of a fixed-price contract
               and the CO believes the FAA can benefit by providing added incentives to
               encourage the contractor to perform beyond the minimum contract requirements.

               (b) The additional administrative effort and cost required to monitor and evaluate
               performance are justified by the expected benefits.

               (c) Multiple offices or functions may be support by the contract.

       (3) Considerations:

               (a) Probable profit included in the fixed price when establishing the award fee.

               (b) Contract contains an award fee determination plan which discusses the method
               the FAA will use to determine how much of the award fee may be paid to the
               contractor. The following topics are recommended:

                       (i) Performance discriminators (describes the specific areas of
                       performance to be evaluated, and the weighting given to each area).

                       (ii) Frequency of evaluations, total award fee, and amount of fee allocated
                       per performance evaluation period.

                       (iii) Process for making changes to the plan.

                       (iv) Termination (describes how the final period of evaluation will be
                       treated should the contract be terminated).


3 Cost-Reimbursement Revised 1/2010
a. General. Cost-reimbursement type contracts provide for payment of allowable incurred costs,
to the extent prescribed in the contract. These contracts establish an estimate of total cost for the
required work and establish a ceiling that the contractor may not exceed (except at its own risk)
without the CO’s approval. Cost-reimbursement contracts are appropriate when uncertainties
involved in contract performance do not permit costs to be estimated with sufficient accuracy to
use any type of fixed-price contract.

b. Cost.

       (1) Description:

       A cost-reimbursement contract in which the contractor receives no fee.

       (2) Use When:

               (a) Research and development work, particularly with nonprofit educational
               institutions or other nonprofit organizations, and for facilities contracts.

               (b) The contractor’s accounting system is adequate for determining costs
               applicable to the contract.

               (c) The uncertainties involved in contract performance do not permit costs to be
               estimated with sufficient accuracy to use a fixed price contract.

               (d) The total value of the contract is high enough to justify the higher
               administrative costs when compared to other contract types.

       (3) Considerations:

               (a) Appropriate FAA surveillance during performance will provide reasonable
               assurance that efficient methods and effective cost controls are used.

               (b) Verifiable cost information is available.

               (c) A ceiling price which the contractor may not exceed without the CO’s
               approval.

               (d) Costs are determined according to FAA Cost Principles.

c. Cost-Sharing.

       (1) Description:

       A cost-reimbursement contract in which the contractor receives no fee and is reimbursed
       only for an agreed-upon share of its allowable costs.
       (2) Use When:

              (a) The contractor agrees to absorb a portion of the costs with the expectation of
              compensating benefits.

              (b) The contractor’s accounting system is adequate for determining costs
              applicable to the contract.

              (c) The uncertainties involved in contract performance do not permit costs to be
              estimated with sufficient accuracy to use a fixed price contract.

              (d) The total value of the contract is high enough to justify the higher
              administrative costs when compared to other contract types.

       (3) Considerations:

              (a) Appropriate FAA surveillance during performance will provide reasonable
              assurance that efficient methods and effective cost controls are used.

              (b) Verifiable cost information is available.

              (c) A ceiling price which the contractor may not exceed without the CO’s
              approval.

              (d) Costs are determined according to FAA Cost Principles.

d. Cost-Plus-Fixed Fee.

       (1) Description:

              (a) Provides for payment to the contractor of a negotiated fee that is fixed at the
              inception of the contract.

              (b) The fixed fee does not vary with actual cost, but may be adjusted as a result of
              changes in the scope of work to be performed under the contract.

              (c) Typically written in either completion form or term form.

              (d) Permits contracting for efforts that might otherwise present too great a risk to
              contractors, but it provides the contractor only a minimum incentive to control
              costs.

       (2) Use When:

              (a) The uncertainties involved in contract performance do not permit costs to be
              estimated with sufficient accuracy to use a fixed-price contract.
              (b) The total value of the contract is high enough to justify the higher
              administrative costs when compared to another contract type.

              (c) The contractor’s accounting system is adequate for determining costs
              applicable to the contract.

              (d) The level of effort required is unknown such as for the performance of
              research or preliminary exploration or study.

              (e) The extra incentive of a cost plus award fee is not necessary, but payment of
              profit is still appropriate.

       (3) Considerations:

              (a) A ceiling price which the contractor may not exceed without the CO’s
              approval is included.

              (b) Costs are determined according to FAA Cost Principles.

              (c) Contractor’s accounting system is adequate for determining costs applicable to
              the contract.

              (d) Cost plus fixed fee does not provide fee incentives for superior performance.

              (e) Generally less costly to administer from an administrative standpoint than cost
              plus award fee.

              (f) May be completion or term. Completion form is preferred because of the
              differences in obligation assumed by the contractor. This forms states a definite
              goal or target and specifies an end product. If the work cannot be completed
              within the estimated cost, FAA may require more effort and increase the
              estimated cost but without an increase in fee.

              (g) If term is used the contract should provide a specific level of effort within a
              definite time period. If FAA considers performance satisfactory, the fixed fee is
              payable at the expiration of the agreed upon period.

e. Cost-Plus-Incentive Fee.

       (1) Description:

              (a) Provides for the initially negotiated fee to be adjusted later by a formula based
              on the relationship of total allowable costs to total target costs.

              (b) Specifies a target cost, target fee, minimum and maximum fees, and a fee
              adjustment formula.
              (c) After contract performance, the fee payable to the contractor is determined in
              accordance with the formula.

       (2) Use When:

              (a) A cost-reimbursement contract is necessary and a target cost and fee
              adjustment formula can be negotiated that are likely to motivate the contractor to
              manage effectively.

              (b) Development and test programs are required.

              (c) Technical performance incentives may be included and it is highly probable
              that the required development of a major system is feasible and FAA has
              established its performance objectives, at least in general terms.

       (3) Considerations:

              (a) The fee adjustment formula provides, within limits, for increases in fee above
              target fee when total allowable costs are less than target costs and decreases in fee
              below target fee when total allowable costs exceed target costs.

              (b) The increase or decrease is intended to provide an incentive for the contractor
              to manage the contract effectively.

              (c) When total allowable cost is greater than or less than the range of costs within
              which the fee-adjustment formula operates, the contractor is paid total allowable
              costs, plus the minimum or maximum fee.

              (d) The fee adjustment formula should provide an incentive that will be effective
              over the full range of reasonably foreseeable variations from target cost.

              (e) If a high maximum fee is negotiated, the contract must also provide for a low
              minimum fee that may be a zero fee or, in rare cases, a negative fee.

              (f) Costs are determined according to FAA Cost Principles.

              (g) Contractor's accounting system is adequate for determining costs applicable to
              the contract.

f. Cost-Plus-Award Fee.

       (1) Description:

              (a) Provides for a fee consisting of: (i) a base amount fixed at inception of the
              contract; (ii) an award amount that the contractor may earn in whole or in part
              during performance and that is sufficient to motivate excellent performance; and
       (iii) a performance evaluation plan that specifies the criteria for determining the
       award fee to be paid. Additional detailed guidance on developing a performance
       evaluation plan, measurable award fee criteria, calculating award fee, and other
       basic guidelines about administering cost-plus-award-fee contracts are in
       Appendices D-2 and D-3 of this Section.

       (b) The amount of the award fee to be paid is based on FAA’s judgmental
       evaluation of the contractor’s performance. This determination is made
       unilaterally by FAA and is not subject to the "Disputes" clause.

(2) Use When:

       (a) The uncertainties involved in contract performance do not permit costs to be
       estimated with sufficient accuracy to use a fixed-price contract.

       (b) The total value of the contract is high enough to justify the higher
       administrative costs when compared to another contract type.

       (c) The contractor’s accounting system is adequate for determining costs.

       (d) The work to be performed is such that it is neither feasible nor effective to
       devise predetermined objective incentive targets applicable to cost, technical
       performance, or schedule.

       (e) The likelihood of meeting acquisition objectives will be enhanced by using a
       contract that effectively motivates the contractor toward exceptional performance
       and provides FAA with the flexibility to evaluate both actual performance and the
       condition under which it was achieved.

(3) Considerations:

       (a) The CO should weigh the cost of higher contract administration costs against
       the expected benefit of selecting a cost-plus-award-fee contract.

       (b) A ceiling price which the contractor may not exceed without the CO's
       approval is included.

       (c) Costs are determined according to FAA Cost Principles.

       (d) The CO must develop measurable award fee criteria to evaluate contractor
       performance. The CO evaluation must contain narrative comments as the bases
       for judging contractor performance, identifying specific contractor strengths,
       weaknesses and deficiencies.

       (e) Contract contains an award fee determination plan which discusses the
       method FAA will use to determine how much the award fee will be paid.
                (f) General topics of an award fee plan:

                         (i) Performance discriminators must be clearly described as these are the
                         bases for grading and scoring methods used to translate evaluation
                         findings into recommended award fee amounts or ranges.

                         (ii) Frequency of evaluations, total award fee, and amount of fee allocated
                         per performance evaluation period.

                         (iii) Process for making changes to the plan.

                         (iv) Termination (describes how the final period of evaluation will be
                         treated should the contract be terminated).

                (f) Number of evaluation criteria and the requirements they represent may differ
                widely among contracts. The criteria and rating plan should motivate the
                contractor to improve performance in the areas rated, but not at the expense of a
                least minimum acceptable performance in all other areas.

                (g) Provide for evaluation at stated intervals during performance, so that the
                contractor is periodically informed of the quality of its performance.

                (h) Partial payment of fee should generally correspond to the evaluation periods.

g. Cost-Plus-Percentage of Cost.

Description: Provides for reimbursement of cost plus an agreed upon percentage of incurred cost
as fee. The amount of fee increases as cost increases. This type of contract rewards inefficient
and ineffective performance, or failure to control cost, with higher amounts of fee. THIS
CONTRACT TYPE IS PROHIBITED.


4 Incentive Contracts Revised 7/2009

a. General.

        (1) Incentive contracts are designed to obtain specific program objectives by establishing
        reasonable and attainable targets clearly communicated to the contractor, and by
        establishing incentives to motivate contractor performance and discourage inefficiency.
        The basic categories of incentive contracts are fixed-price incentive and cost-
        reimbursement incentive. Award-fee contracts are also a type of incentive contract.

        (2) When predetermined, formula-type incentives on technical performance or delivery
        are included in a contract, increases in profit or fee are provided only for contractor
        achievement surpassing the targets, and decreases are provided for to the extent that such
       targets are not met. The incentive increases or decreases are applied to performance
       targets rather than minimum performance requirements.

b. Cost Incentives.

       (1) Most incentive contracts include only cost incentives, which take the form of
       a profit or fee adjustment formula and are intended to motivate the contractor to
       effectively manage costs. No incentive contract should provide for other
       incentives without also providing a cost incentive (or constraint).

       (2) Excluding cost-plus-award-fee contracts, incentive contracts include a target
       cost, a target profit or fee, and a profit or fee adjustment formula that (within the
       constraints of a price ceiling or minimum and maximum fee) provides:

              (a) Actual cost that meets the target will result in the target profit
              or fee;

              (b) Actual cost that exceeds the target will result in downward
              adjustment of target profit or fee; and

              (c) Actual cost that is below the target will result in upward
              adjustment of target profit or fee.

c. Performance Incentives.

       (1) Performance incentives may be considered for specific product characteristics
       (e.g., range, speed, maneuverability) or other specific elements of the contractor’s
       performance. These incentives should relate profit or fee to results achieved by
       the contractor, compared with specified targets.

       (2) To the extent practicable, positive and negative performance incentives should
       be considered for service contracts involving objectively measurable tasks when
       quality of performance is critical and incentives are likely to motivate the
       contractor.

       (3) Technical performance incentives may involve a variety of specific
       characteristics that contribute to the overall performance of the end item. The
       incentives on individual technical characteristics should be balanced so that no
       one of them is exaggerated to the detriment of the overall performance of the end
       item.

       (4) Performance tests and/or assessments of work performance are generally
       essential in order to determine the degree of attainment of performance targets.
       The contract should be as specific as possible in establishing test criteria (such as
       testing conditions, instrumentation precision, and data interpretation) and
       performance standards (such as the quality levels of services to be provided).
       (5) Because performance incentives present complex problems in contract
       administration, the CO should negotiate incentives in full coordination with
       Government engineering and pricing specialists.

       (6) It is essential that the Government and contractor agree explicitly on the effect
       that contract changes (e.g., pursuant to the Changes clause) will have on
       performance incentives.

       (7) The CO must exercise care, in establishing performance criteria, to recognize
       that the contractor should not be rewarded or penalized for attainments of
       Government-furnished components.

d. Delivery Incentives.

       (1) Delivery incentives should be considered when improvement from a required
       delivery schedule is a significant Government objective. It is important to
       determine the Government’s primary objectives in a given contract (e.g., earliest
       possible delivery or earliest quantity production).

       (2) Incentive arrangements on delivery should specify the application of the
       reward-penalty structure in the event of Government-caused delays or other
       delays beyond the control, and without the fault or negligence, of the contractor or
       subcontractor.

e. Structuring Multiple-Incentive Contracts. A multiple-incentive arrangement should:

       (1) Motivate the contractor to strive for outstanding results in all incentive areas; and

       (2) Compel trade-off decisions among the incentive areas, consistent with the
       Government’s overall objectives for the acquisition. Because of the interdependency of
       the Government’s cost, the technical performance, and the delivery goals, a contract that
       emphasizes only one of the goals may jeopardize control over the others. Because
       outstanding results may not be attainable for each of the incentive areas, all multiple-
       incentive contracts must include a cost incentive (or constraint) that operates to preclude
       rewarding a contractor for superior technical performance or delivery results when the
       cost of those results outweighs their value to the Government.

f. Checklist for Incentive Contracts.

       Pre-award:

       • Was a review of incentive fee contracting at AMS Procurement Guidance T3.2.4.A.4 a.-
       e. completed?

       • Is it likely the incentive affects cost, schedules or quality in a positive way?
• Are there potential unintended negative consequences in the incentive on costs,
schedules or quality?

• Is the incentive challenging and attainable?

• Is the incentive affordable for FAA?

• Are resources available to properly formulate and monitor the contract?

• Can risks and cost benefits be assessed?

• Can incentives be objectively measurable?

• Do incentives correlate to the desired results?

• What form should the incentive take?

• Was there market research and open communications with vendors in developing the
incentive?

• Are there evaluation factors related to the incentive?

• Are multiple incentives (i.e., combination of cost, performance/delivery, or quality
incentives) appropriate?

• Does the incentive fee plan provide clear direction on how the incentive fee will be
applied and monitored?

• What is appropriate contract type - CPIF or FPI?

• Are there any goals where multiple incentives conflict?

• Does the incentive have the requisite limits?

Post-award:

• Is the incentive effective?

• Do incentive assumptions need to be reassessed?

• Are contractors being rewarded for simply meeting contract requirements?

• Is the incentive focused on the objective?

• How effective are the tools and processes being used to monitor the incentive?
        • Is there a need to revise the incentive due to changes in requirements or contract
        developments?


5 Indefinite Delivery Revised 7/2007

a. General. There are three types of indefinite delivery contracts: definite quantity;
requirements; and indefinite-quantity. An indefinite delivery contract permits flexibility in both
quantity and delivery time, and in ordering products or services after requirements materialize.
These contract types are appropriate when the exact times or exact quantities of future deliveries
are not known at the time of contract award, and FAA wants a firm commitment from the
contractor to accept all orders placed in accordance with the contract terms. Other
considerations for indefinite delivery contracts include:

        (1) Contracts may provide for any appropriate cost or pricing arrangement.

        (2) Cost or pricing arrangements that provide for an estimated quantity of supplies or
        services (e.g., estimated number of labor hours) must comply with the appropriate cost
        and pricing procedures.

        (3) Prices remain fixed for the duration of the contract unless specific provisions are
        included for price adjustments.

        (4) A separate public announcement is not required for orders placed under a
        requirements or indefinite quantity contract.

        (5) Contract schedule should include the names of organizations authorized to issue
        orders.

        (6) The contract may include provisions for placing oral, electronic, or facsimile orders.
        Funds should be properly obligated and oral orders confirmed in writing.

b. Definite Quantity.

        (1) Description:

        Provides for delivery of a definite quantity of specific supplies or services for a fixed
        period, with deliveries or performance to be scheduled at designated locations upon
        order.

        (2) Use When:

                 (a) FAA can determine in advance that a definite quantity of supplies or services
                 will be required during the contract period and the supplies or services are
                 regularly available or will be available after a short lead-time.
              (b) The FAA’s total requirements are known but the delivery schedule or
              locations are not known in advance.

       (3) Considerations:

              (a) Limits FAA’s and the contractor’s obligation to the quantity specified in the
              contract.

              (b) May also contain provisions to order option quantities.

c. Indefinite Quantity.

       (1) Description:

              (a) Limits FAA’s obligation to the minimum quantity specified in the contract.

              (b) Provides for delivery of an indefinite quantity within stated limits, of specific
              products or services during a fixed period; with deliveries to be scheduled by
              placing orders with the contractor.

              (c) Also known as a delivery order contract.

       (2) Use When:

              (a) The FAA cannot predetermine, above a specified minimum, the precise
              quantities of supplies or services that will be required during the contract period.

              (b) The FAA does not wish to commit itself for more than a minimum quantity.

              (c) A recurring need is anticipated.

              (d) Funds for other than the stated minimum quantity are obligated by each
              delivery order, and not by the contract itself.

       (3) Considerations:

              (a) The schedule of items should include a realistic estimate of total orders to be
              placed during the contract term.

              (b) Contract may include a maximum or minimum quantity that FAA may order
              under delivery order and the maximum that it may order during a specific period
              of time.

              (c) The contract should contain a minimum quantity of supplies or services that
              the contractor may be required to deliver, if ordered. The minimum quantity
              should be more than nominal but should not exceed the amount that FAA is fairly
              certain to order.

              (d) Making multiple awards may be beneficial. In making this determination, the
              CO should exercise sound business judgment as part of acquisition planning. The
              administrative cost of multiple contracts may outweigh any potential benefits.

              (e) If multiple awards are anticipated, include a notice to offerors.

d. Requirements Contract.

       (1) Description:

              (a) Provides for filling all actual product or service requirements of designated
              government activities during a specified period with delivery or performance
              scheduled by placing orders with the contractor.

              (b) Funds are obligated by each delivery order, not by the contract itself.

              (c) Also known as a delivery order contract.

       (2) Use When:

              (a) The FAA anticipates recurring requirements but cannot predetermine the
              precise quantities of products or services that designated FAA activities will need
              during a definite period.

              (b) The contract states a realistic estimated total quantity.

              (c) The estimate is based on the most current information available, such as
              previous requirements or consumption.

       (3) Considerations:

              (a) Estimated requirements are not a representation to an offeror or contractor that
              the estimated quantity will be ordered, or that conditions affecting requirements
              will be stable or normal.

              (b) Contract may include a maximum limit of the contractor’s obligation to
              deliver and the FAA’s obligation to order.

              (c) Contract may specify minimum/maximum quantities that the FAA may order
              under each individual order and the maximum it may order during a specified
              period of time.
                  (d) If contract is to acquire work on exiting FAA property (e.g., repair,
                  modification or overhaul), the schedule should specify that failure of FAA to
                  furnish such items in the amounts or quantities described in the schedule as
                  ‘estimated’ or ‘maximum’ will not entitle the contractor to any equitable
                  adjustment in price under the FAA property clause of the contract.


6 Time-and-Materials / Labor-Hour Revised 7/2007

a. Description:

A time-and-materials (T&M) or labor-hour (LH) contract provides for acquiring supplies or
services on the basis of direct labor hours at specified fixed hourly rates. Fixed hourly labor
rates include wages, overhead, general and administrative expenses, and profit. A T&M
contract also includes provisions for acquiring materials at actual cost (and may include a
handling fee).

b. Use When:

A T&M or LH contract may be used when no other contract type is suitable, and it is not
possible at the time of award to accurately estimate the extent or duration of the work or to
anticipate costs with any reasonable degree of confidence.

c. Considerations:

       (1) Justification. The CO must document the basis for selecting a T&M or LH contract.
       This justification must explain:

                  (a) Why no other contract type is suitable;

                  (b) Why it is not possible to accurately estimate the extent or duration of the work
                  or to anticipate costs with any reasonable degree of confidence;

                  (c) The market research conducted; and

                  (d) How the requirement has been structured to best allow for another contract
                  type with less risk (such as fixed-price) to FAA in future procurements. This
                  may include transitioning individual line items to fixed-price (for example,
                  materials), while keeping other line items as T&M (for example, installation
                  services).

       (2) Approval of Long Term Contracts. The Chief of the Contracting Office must
       approve any T&M or LH contract with a total performance period of more than five years
       (base period plus options, or contracts extended by modification). The CO documents
       the basis for the performance period, includes this information in the T&M or LH
justification required by paragraph c. (1) above, and sends to the justification to the
COCO for approval.

(3) Ceiling. T&M or LH contracts must include a ceiling price that the contractor cannot
exceed without the CO’s approval. There should be a reasonable relationship between
the ceiling price established at the time of award and the amount of work expected to be
performed. The ceiling price should not exceed 110% of the funding required to support
the anticipated work.

(4) Labor Categories. T&M or LH contracts should establish only those labor categories
necessary for the required work. The program official and CO must jointly document the
basis for selecting labor categories to be used. The contract should specify any minimum
education, experience, and other qualifications required for each labor category.

(5) Hourly Rates. T&M or LH contracts must specify for each labor category, separate
fixed hourly rates that include wages, overhead, general and administrative expense, and
profit. For noncompetitive awards, the contract must specify fixed hourly rates for each
labor category, whether performed by contractor personnel, subcontractor personnel, or
employees of a division, subsidiary, or affiliate of the contractor under a common control.

(6) Material Costs.

       (a) Materials are:

               (1) Direct materials: Those materials that enter directly into the end
               product or are consumed in connection with the furnishing of the end
               product or service;

               (2) Subcontracts: For supplies or incidental services for which there is not
               a labor category in the contract;

               (3) Other direct costs: Includes incidental services for which there is not a
               labor category in the contract, travel, and computer usage charges; and

               (4) Applicable indirect costs.

       (b) Material costs are compensable only if the contract provides for such costs.

       (c) When included as part of material costs, material handling costs (or fees) must
       include only costs excluded from the labor-hour rate. These costs may include all
       appropriate indirect costs allocated to direct materials in accordance with the
       contractor’s usual accounting procedures.

(7) Monitoring. T&M or LH contracts provide limited incentive for a contractor to
control costs or efficiently use labor. FAA personnel must closely monitor a contractor’s
performance to ensure efficient work methods and adequate cost controls are in place.
       Methods of monitoring generally relate to the dollar value and risk associated with the
       contract, and may include:

               (a) Random Sampling. Random sampling is a statistically based method that
               assumes receipt of acceptable performance if a given percentage or number of
               scheduled assessments is found to be acceptable;

               (b) 100% Inspection. This surveillance/assessment type is preferred for those
               tasks that occur infrequently; including tasks that cannot be random sampled
               because the sample size for a small lot may exceed the lot size;

               (c) Periodic Surveillance. Periodic sampling is similar to random sampling, but
               it is planned at specific intervals or dates; or

               (d) Customer Feedback. Customer feedback is first hand information from the
               actual users of the service.


7 Letter and Ceiling Priced Contracts Revised 7/2007

a. General. A letter contract is a preliminary contractual instrument that authorizes a contractor
to immediately begin work, subject to negotiating a definitive contract. A letter contract should
not be used for contract modifications. A ceiling priced contract authorizes a contractor to start
performance before final agreement on contract price.

b. Letter Contract.

       (1) Description:

               (a) Provides a preliminary authorization for the contractor to immediately begin
               work.

               (b) Includes a brief description of the work, performance period, and a limitation
               on the total funding amount that a contractor may expend and FAA will pay.

               (c) Contractor agrees to be bound by the AMS termination, changes and disputes
               provisions.

       (2) Use When:

               (a) The FAA’s interests demand that the contractor be given a binding
               commitment so that work can start immediately and negotiating a definitive
               contract is not possible in sufficient time to meet the requirement.

               (b) Emergency or other special situations for limited amounts.
       (3) Considerations:

               (a) Should not be used to commit the FAA to a definitive contract in excess of the
               funds available at the time the letter contract is executed.

               (b) Should not be amended to satisfy a new requirement unless that requirement is
               inseparable from the existing letter contract. Any such amendment is subject to
               the same requirements and limitations as a new letter contract.

c. Ceiling Priced.

       (1) Description:

               (a) A written contractual instrument that contains all required AMS provisions,
               except for final agreement on contract price or cost.

               (b) Contains all requirements for performance or delivery.

       (2) Use When:

               (a) The FAA’s interests demand that the contractor be given a binding
               commitment so that work can start immediately and negotiating a definitive
               contract price or cost is not possible in sufficient time to meet the requirement.

               (b) The ceiling priced contract contains the maximum price or cost to be
               negotiated; the contract type for the definitized contract; FAA's maximum
               liability pending definitization; a definitization schedule; and a provision which
               permits the CO to determine a reasonable price or cost (subject to the disputes
               provisions).

       (3) Considerations:

               (a) Use of a ceiling-priced contract for a cost-reimbursement contract should not
               be construed to alter the obligation of the parties to complete performance of the
               cost type contract.

               (b) The definitization schedule should include dates for submission of the
               contractor’s price proposal, required cost or pricing data and, if required, make-
               or-buy and subcontracting plans; a date for the start of negotiations; and a target
               date for definitization.

               (c) The definitization should be completed within 180 days after the date of the
               ceiling-priced contract or before completion of 40% of the work to be performed,
               whichever occurs first.
8 Multi-year Contracting Revised 7/2007

a. Description. Multi-year contracting is a special method of acquiring known requirements for
supplies or services for up to five program years, without total program funding at the time of
basic contract award. Funds are obligated only for the first program year’s requirements.
Contract performance after the first year is contingent on appropriations for each subsequent
program year. If appropriations are not made, then FAA must cancel the contract and the
contract may provide for a cancellation payment to the contractor. Multi-year contracts differ
from multiple year contracts in that multi-year contracts obtain more than one year’s requirement
without establishing and having to exercise an option for each program year after the first.

b. Multi-year Authority. Specific legal authority authorizes or restricts FAA’s use of multi-year
contracts. Before planning a multi-year contract, the CO must obtain legal counsel’s
concurrence.

c. Benefits. Advantages of using multi-year provisions include to:

        (1) Lower costs;

        (2) Enhance standardization;

        (3) Reduce administrative burden associated with contract award and administration;

        (4) Ensure substantial continuity of production or performance, to avoid annual startup
        costs, pre-production testing costs, make-ready expenses, and phase-out costs;

        (5) Stabilize contractor workforces;

        (6) Avoid establishing quality control techniques and procedures for a new contractor
        each year;

        (7) Broaden the competitive base, with opportunity for participation by contractors not
        otherwise willing or able to compete for lesser quantities, particularly in cases involving
        high startup costs; and

        (8) Provide incentives to contractors to improve productivity through investment in
        capital facilities, equipment, and advanced technology.

d. Considerations. When deciding whether to use multi-year provisions, the CO should
consider:

        (1) There will be a continuing requirement consistent with current plans for the proposed
        contract period. The minimum need for the item to be purchased is expected to remain
        substantially unchanged during the proposed contract period in terms of production rate,
        acquisition rate, and total quantities;
       (2) The contract will require a substantial initial investment in plant or equipment, or
       there will be a substantial contingent liability for assembling, training, or transporting a
       specialized workforce;

       (3) The contract will encourage competition and promote economies in operation;

       (4) The contract will promote safety or efficiency of the National Airspace System and
       will result in reduced total costs;

       (5) There is reasonable expectation that throughout the contemplated contract period
       FAA will request funding for the contract at the level required to avoid contract
       cancellation;

       (6) There is a stable design for the item to be acquired and the technical risks associated
       with such item are not excessive; and

       (7) There are realistic estimates of both cost of the contract and anticipated cost
       avoidance through the use of multi-year provisions.

e. Services. Fixed-price and fixed-price incentive contracts for the following services, and
supplies related to those services, may be acquired using multi-year provisions:

       (1) Operation, maintenance, and support of facilities and installations;

       (2) Operation, maintenance, and modification of aircraft, vehicles, and other highly
       complex equipment;

       (3) Specialized training requiring high quality instructor skills, including training of pilots
       and aircrew members and foreign language training; and

       (4) Base services, including ground maintenance, aircraft refueling, bus transportation,
       and refuse collection and disposal.

f. Multi-year provisions should not be used to acquire construction or real property.

g. Soliciting Offers and Pricing.

       (1) The CO may solicit separate offers for the current one-year program requirements
       alone and for the total multi-year program requirements. Separate offers allow the CO to
       determine which alternative provides the lowest unit price and whether there are potential
       savings from using multi-year provisions. When in FAA’s best interest, the CO may
       solicit offers for the total multi-year requirements only.

       (2) Multi-year contracts allow certain costs to be amortized over the entire contract
       quantity, resulting in identical (level) unit prices for all items or services. When level unit
       pricing is not in FAA’s best interest, the CO may use variable unit pricing, provided that
       for competitive proposals there is a valid method of evaluation.

       (3) Given the longer period of performance for a multi-year contract, the CO should
       consider risk when negotiating a profit or fee objectives and should consider financing
       arrangements that reflect contractor’s cash flow needs.

h. Cancellation. If a multi-year contract is canceled, FAA should fairly compensate a contractor
for the work done and for preparations made for the canceled portion of the contract. The
specific dollar amount of "fair compensation" is only determined if the contract is actually
canceled. The contractor submits a cancellation claim, the CO evaluates it, and the parties
negotiate the “fair compensation," called the cancellation charge, which FAA will pay to the
contractor. A cancellation charge is the amount of unrecovered costs that would have been
recouped through amortization over the full term of the contract, including the term canceled.
The cancellation ceiling is the maximum cancellation charge that the contractor can receive in
the event of cancellation. For each point in time when the FAA could cancel the contract, there
is a unique cancellation ceiling.

       (1) Whether, or to what extent, cancellation provisions are included in multi-year
       contract depends on the circumstances. The CO may use modified cancellation provisions
       or exclude cancellation provisions when appropriate.

       (2) If cancellation occurs, the contractor is entitled to payment in accordance with
       contract terms and conditions. The terms of cancellation should outline cancellation
       procedures, cancellation points in time, the way in which cancellation will be funded,
       types of costs to be included in the cancellation charge, and cancellation ceiling.

       (3) Cancellation charges need not be funded before cancellation. The CO should
       determine whether to fund the cancellation ceiling or treat it as a contingent (unfunded)
       liability.

       (4) All program years except the first are subject to cancellation. Each subsequent
       program year has a cancellation ceiling. Cancellation ceilings should exclude amounts for
       items included in prior program years. The cancellation ceiling for each program year is
       reduced in direct proportion to the remaining requirements subject to cancellation.

       (5) Multi-year contracts may allow reimbursement of unrecovered non-recurring costs
       included in the price of canceled items to protect the contractor against loss resulting
       from cancellation.

       (6) In determining cancellation ceilings, the CO should estimate reasonable pre-
       production or startup, labor learning, and other non-recurring costs to be incurred by an
       ‘average’ prime contractor or subcontractor, which would be applicable to, and which
       normally would be amortized over, the items or services to be furnished under the multi-
       year requirements. Non-recurring costs include such costs, where applicable, as plant or
       equipment relocation or rearrangement, special tooling and special test equipment, pre-
        production engineering, initial rework, initial spoilage, pilot runs, allocable portions of
        the costs of facilities to be acquired or established for the conduct of the work, costs
        incurred for the assembly training and transportation of a specialized workforce to and
        from the job site, and unrealized labor learning. Costs should not include any costs of
        labor or materials, or other expenses (except as indicated above), which might be
        incurred for performance of subsequent program year requirements. The total estimate of
        the above costs must then be compared with the best estimate of the contract cost to
        arrive at a reasonable percentage or dollar figure. To perform this calculation, the CO
        should obtain in-house engineering cost estimates identifying the detailed recurring and
        non-recurring costs, and indicating labor learning implications.

        (7) The CO should establish cancellation dates for each program year’s requirements
        regarding production lead time and the date by which funding for these requirements can
        reasonably be established. The CO should include these dates in the schedule, as
        appropriate.

l. The CO should limit the FAA’s payment obligation to an amount available for contract
performance. The CO must insert the amount for the first program year in the contract upon
award and modify it for successive program years upon availability of funds. If the contract is
terminated for convenience of the FAA in whole, including items subject to cancellation, the
FAA’s obligation must not exceed the amount specified in the schedule as available for contract
performance, plus the cancellation ceiling.


9 Options Added 7/2007

a. An option is a unilateral contractual right through which FAA may, within a specified time,
chose to purchase additional quantities of supplies or services or extend the term of a
contract. Options can be an effective method of managing risk, reducing administrative costs of
resoliciting for recurring requirements, and motivating contractor’s performance. Options do not
guarantee contractors that FAA will acquire more than the basic contract quantity or extend the
period of performance.

b. Options may be stated as increased quantities of supplies or services, or may be expressed in
terms of:

        (1) Percentage of specific contract line items.

        (2) Increase in specific contract line items.

        (3) Additional numbered line items.

        (4) Extensions to the term of the contract.

c. Services. Generally, contracts with options for recurring services should be limited to five
years. Contracts subject to the Service Contract Act cannot exceed five years, including options.
d. Evaluation of Option/Exercise at Award. The solicitation must state whether the CO will
evaluate offers inclusive or exclusive of options and, if applicable, state whether options will be
exercised at the time of award. If the CO may exercise an option at award, the solicitation must
specify the price at which FAA will evaluate the option (highest option price offered or option
price for specified requirements).

e. Price Limitation. A solicitation may allow options to be offered without or with price
limitation. Solicitations may require options to be offered at prices no higher than those for the
initial requirement. Solicitations that limit option prices should specify that FAA will accept an
offer containing an option price higher than the basic price only if the acceptance does not
prejudice any other offeror.

f. Priced Options. Priced options contain specific option pricing and, if applicable, an
appropriate economic price adjustment index. Priced options give FAA a unilateral right to
purchase additional quantities or extend a contract period at pre-agreed prices and terms. Priced
options are appropriate when the market is relatively stable, price inflation is fairly predictable,
the nature of the requirement is not likely to change significantly between award and the time the
option is exercised, or when it may be difficult to test the market at a future date.

g. Unpriced Options. For unpriced options, the terms and conditions are agreed to at the time of
basic contract award but option prices are not agreed to until exercise. Unpriced options may
include a not-to-exceed amount established at the time of basic contract award (otherwise
exercise of the option requires single source justification). Unpriced options may be bilaterally
exercised after agreement on prices.

h. Public Announcement. A public announcement is not required for option exercise.

i. Option Exercise. The CO makes a prudent business decision whether to exercise an option.
The CO, consulting with the program official, should consider funding availability, option prices,
and contractor performance (timeliness and quality) when arriving at this decision. The CO
may also consider:

       (1) A new solicitation, an informal analysis of prices, or examination of the market would
       not produce better prices or a more advantageous offer than that offered by the option.

       (2) The time between award of the basic contract and option exercise is so short that it
       indicates the option price is the lowest price obtainable or the more advantageous offer.

j. Economic Price Adjustment. For options that include an economic price adjustment, the CO
should determine the effect of that adjustment on option prices before exercise.

k. Notification. The CO must notify the contractor that FAA is exercising an option; options are
not self-exercising. When exercising an option, the CO provides written notice to the contractor
within the time period specified in the contract. The contract terms may also require the CO to
give preliminary notice of intent to exercise an option.
10 Basic Agreement Revised 7/2007

A basic agreement is a written instrument of understanding, negotiated between FAA and a
contractor, which contains contract clauses applying to possible future contracts between the
parties. During the basic agreement’s term, separate future contracts will incorporate by
reference or attachment the required and applicable clauses agreed upon in the basic agreement.
A basic agreement is not a contract.

a. Application. A basic agreement should be used when a substantial number of separate
contracts may be awarded to a contractor during a particular period and significant recurring
negotiating problems have been experienced with the contractor. Basic agreements may be used
with negotiated fixed-price or cost-reimbursement contracts.

b. Contents. Basic agreements should contain the clauses required by AMS and other appropriate
clauses that the parties agree to include in each contract.

c. Termination. Each basic agreement will provide for discontinuing its future applicability upon
30 days written notice by either party. The CO should annually review each basic agreement
before the anniversary of its effective date and revised as necessary. Basic agreements may need
to be revised before the annual review due to mandatory statutory requirements. A basic
agreement may be changed only by modifying the agreement itself and not by a contract
incorporating the agreement. Discontinuing or modifying a basic agreement must not affect any
prior contract incorporating the basic agreement. COs may obtain and use existing basic
agreements of another agency when practical.

d. Exclusions. A basic agreement does not cite appropriations or obligate funds, or state or imply
any agreement by FAA to place future contracts or orders with the contractor.

e. Incorporating contract. Each contract incorporating a basic agreement includes a scope of
work and price, delivery, and other appropriate terms applicable to the particular contract. The
basic agreement should be incorporated into the contract by specific reference (including
reference to each amendment) or by attachment. Clauses pertaining to subjects not covered by
the basic agreement, but applicable to the contract being negotiated, should be included in the
same manner as if there were no basic agreement.


11 Basic Ordering Agreement Revised 7/2007

A basic ordering agreement is a written instrument of understanding, negotiated between the
FAA and a contractor. A basic ordering agreement contains terms and conditions applying to
future contracts (orders) between the parties during its term, a description, as specific as
practicable, of supplies or services to be provided, and methods for pricing, issuing and
delivering future orders under the basic ordering agreement. A basic ordering agreement is not a
contract.
a. Application. A basic ordering agreement may be used to expedite contracting for uncertain
requirements for supplies or services when a substantial number of requirements for the type of
supplies or services covered by the agreement are anticipated to be purchased from the contractor
but specific items, quantities, and prices are not known at the time the agreement is executed.
Under proper circumstances, the use of these procedures can result in economies in ordering
parts for equipment support by reducing administrative lead-time, inventory investment and
inventory obsolescence due to design changes.

b. Contents. Each basic ordering agreement describes the method for determining prices to be
paid to the contractor for the supplies or services. It also includes delivery terms and conditions
or specifies how they will be determined, dispute provisions, and any special payment
provisions. The agreement contains a list of FAA activities authorized to issue orders under the
agreement. Each basic ordering agreement specifies the point at which the order becomes a
binding contract (e.g., issuance of the order, acceptance of the order in a specified manner, or
failure to reject the order within a specified number of days). The agreement also contains a
statement that failure to reach agreement on price for any order issued before its price is
established will be processed as a dispute under the dispute provisions included in the basic
ordering agreement.

c. Administration. The CO should annually review each basic ordering agreement before the
anniversary of its effective date and revised as necessary. Basic ordering agreements may need to
be revised before the annual review due to mandatory statutory requirements. A basic ordering
agreement should be changed only by modifying the agreement itself and not by individual
orders issued under it. Modifying a basic ordering agreement does not retroactively affect orders
previously issued under it.

d. Issuing Orders. A CO representing any Government activity listed in a basic ordering
agreement may issue orders for supplies or services covered by that agreement. A CO may issue
orders under basic ordering agreements on any appropriate contractual instrument that
incorporates by reference the provisions of the basic ordering agreement. The CO should neither
make any final commitment nor authorize the contractor to begin work on an order under a basic
ordering agreement until prices have been established, unless the order establishes a ceiling price
limiting FAA’s obligation and either:

       (1) The basic ordering agreement provides adequate procedures for timely pricing of the
       order early in its performance period; or

       (2) The need for the supplies or services is compelling and unusually urgent. For
       example, FAA would be seriously injured, financially or otherwise, if the requirement
       were not met sooner than would be possible if prices were established before the work
       began. The CO should proceed with pricing as soon as practical. In no event should an
       entire order be priced retroactively.


B Clauses
view contract clauses


C Forms

view procurement forms


D Appendices Revised 7/2008

1 Appendix - Sample Letter Contract Added 7/2008

                               SAMPLE LETTER CONTRACT

Mr. John Smith

Smith Services Company

1234 Easy Street

Oklahoma City, Oklahoma 73123

Dear Mr. Smith:

This letter constitutes an authorization for you to commence work on proposed contract
__________ (insert contract number and brief description of work), subject to the following:

(a) A maximum of $__________ (insert amount equal to 50% of contractor proposal or a not-
to-exceed amount) of costs may be incurred.

(b) Expenditures above that amount are not authorized, and are at your own risk.

(c) Work is authorized to begin __________ (insert date not earlier than date of letter).

(d) This authorization is subject to FAA cost principles described in FAA Acquisition
Management System Policy section 3.3.2.

(e) When the contract for this project is definitized, it will be a __________ (insert appropriate
type of contract).

(f) In the event of contract termination, calculation of payments due under this authorization will
be accomplished under the provisions of clause(s) __________ (enter appropriate termination
clauses).
(g) The work authorized by this letter is described in your proposal of ___________ (date or
other appropriate reference to the SOW). (COs should ensure a copy of the SOW is attached to
the COTR copy of the letter contract.)

(h) The Contracting Officer's Technical Representative is ___________(insert appropriate
information).; telephone number is ___________(insert appropriate information).

(i) You must furnish cost or pricing information if such information is requested by the
Contracting Officer.

(j) (The CO should add any other terms and conditions deemed necessary for the proper
execution of the project)

(k) A definitized contract is expected to be completed no later than ______ (insert number of
workdays from date of letter)

(l) Accounting data: _______________ (insert appropriate information).

Sincerely,



Contracting Officer


2 Appendix - Award Fee Added 7/2008

1. Introduction

This appendix includes additional explanation of award-fee. It focuses on award fee under cost-
reimbursement contracts, but the general concepts apply to award fee on other types of
contracts.

An award fee contract provides a separate amount that a contractor may earn, in whole or in part,
based on FAA’s periodic evaluations of its performance. Award fee is intended to reward
contractor performance, considering both the levels of performance and conditions under which
the contractor achieved those levels. Award fee gives FAA flexibility to judgmentally evaluate
contractor performance, and to quickly change evaluation plans to reflect changes in FAA
management emphasis or concern.

2. Award Fee Provisions

A cost-plus-award-fee contract includes an estimated cost, a base fee, an award fee, and an
evaluation and fee payment plan. The contract also includes a clause specifying that award fee
determinations are made unilaterally by the designated Fee Determination Official (FDO),
according to the approved evaluation plan, and determinations are not subject to appeal under the
Disputes clause.

3. Administrative Cost Versus Benefit

Award fee requires added administrative activities. Tailoring an award fee approach avoids an
administrative burden disproportionate to any expected improvements in a contractor's
performance and overall project management. When deciding whether to use award fee, the
Contracting Officer (CO) should consider administrative cost versus expected benefit.
Administrative cost includes staff time to monitor, evaluate, document, brief and otherwise
implement award fee. Cost drivers include frequency of evaluation periods, and number of
people involved in administering award fee. Benefits, which may be intangible and difficult to
estimate, could include dollars saved by enhanced technical capability.

4. Fees

The total amount of base fee (if any) and award fee is established at contract award. The sum of
base fee and award fee should reflect the overall character, difficulty, and uncertainty of the
effort.

Base fee is a fixed amount, similar to fixed fee, that a contractor earns for basic risk of contract
performance. Base fee is optional; FAA may decide instead to reward contractor performance
solely through award fee. When base fee is used, the amount should be limited so that it does
not undermine the effectiveness of award fee. Base fee payments are generally made as part
of the regular cost voucher process.

Award fee is a separate amount sufficient enough to reward the contractor for all levels above
minimally acceptable performance. Actual award fee earned by the contractor is determined by
FAA's assessment of performance against criteria included in an evaluation plan. The contractor
can earn any amount of available award fee, from none to all. The contractor does not earn any
award fee for less than satisfactory performance. Award fee available, but not earned, for an
evaluation period is forfeited by the contractor and cannot carry forward to subsequent
evaluation periods.

When establishing award fee, the CO may consider weighted guidelines profit/fee analysis
factors, such as contractor effort, complexity of the effort, labor and indirect costs, cost risk, and
other factors as applicable. Award fee should not be excessive, but should be large enough to
adequately motivate contractor performance.

One of the most difficult situations is a hybrid contract, where there might be multiple
performance incentives in addition to an award fee. The amounts allocated to each fee area must
be sufficient to adequately motivate and reward a contractor to excel in each. There should be a
balance in which no fee area is either so insignificant that it offers little reward or so large that it
overshadows all other areas. The number of factors being incentivized also plays a part. When
too many factors are incentivized, the prospect increases of any one item being too small (and
thus overlooked), or the incentives being (or perceived as being) inconsistent and working at
cross purposes. Using too many factors can also be confusing and increase the administrative
burden.

5. Combination with Other Contract Types

A hybrid contract may be appropriate when certain aspects of a contract performance are best
suited to objective measurement and other portions are suited to subjective measurement. For
example, an incentive fee might be used for cost control and award fee to reward technical
performance. Given the interrelationship between contract costs and the other critical
performance elements, the CO should ensure that combinations of objective cost control
incentives and subjective/objective award fee determinations do not result in a contractor making
trade-off decisions inconsistent with FAA objectives and performance priorities. Poorly
structured incentives can result in increased costs with little or no improvement in performance
or cost savings with a corresponding loss in performance. No performance element should be
incentivized more than once. If a separate incentive is used for cost, then cost control cannot also
be rewarded in the award fee. Similarly, performance elements should be carefully structured
and defined to avoid overlap, and to preclude downgrading in multiple elements for a single type
of poor performance. When using hybrid contracts, financial data must be segregated to allow
different cost and fee payments based on each type of contract and to provide specific
management information and accountability for the work under the different types of
contract. Because of the complexity in structuring and administering a hybrid contract, the CO
should be reasonably sure that increased administrative costs will be offset by potential benefit.

6. Organization and Administration

The most effective organizational and administrative approach differs with each situation. The
overall objective is to not impose an unreasonable administrative burden, considering the value
and complexity of the contract. The following are basic guidelines:

       a. Avoid creating too many organizational layers. Excessive layers contribute to
       unnecessary paperwork, delays in turnaround time, and inordinate staffing demands.

       b. At the same time, the CO and project manager’s assessments should be reviewed by
       higher level management officials who have a broader perspective and are not involved
       in the daily interaction with the contractor. Evaluations must be based on contractually
       required performance.

       c. Tailor performance evaluation plans to the specific situation, but do not reinvent the
       wheel. The tailored, case-by-case application of successfully used procedures and
       practices generally works best.

       d. The objective is to evaluate performance and not micromanage it. The Government
       tells the contractor what results are expected and important. It then evaluates and rewards
       the contractor as appropriate for achieving or exceeding the desired results.
       Communication with contractor personnel about performance should not lead to
       Government direction in a manner that compromises the contractor's responsibility or
       ability to manage under the contract.

7. Organizational Levels and Functions

The following basic organizational structure is appropriate for most situations. This structure
and responsibilities may be modified to fit the circumstance:

       Fee Determination Official

               Performance Evaluation Board (with chairperson)

                      Performance Evaluation Coordinators (optional)

                              Performance Monitors

Fee Determination Official (FDO) -The FDO is organizationally senior to the Performance
Evaluation Board (PEB) members. The FDO is identified by position title, and not name, in the
award fee evaluation plan. This establishes the level of the award fee determinations, while
eliminating the need to modify the contract if the incumbent FDO changes. The FDO’s
responsibilities include:

       a. Establishing the PEB.

       b. Approving the award fee evaluation plan and any changes required during
       performance, unless the FDO delegates responsibility for changes to the plan to the PEB.

       c. Considering the PEB report for each evaluation period and discussing it with the PEB
       Chair and, if appropriate, with others such as the contractor.

       d. Determining the amount of award fee earned and payable for each evaluation period.
       In the cases where all evaluation ratings are interim except the last one, determining the
       amount of interim award fee to be paid for each evaluation period. The FDO ensures the
       amount and percentage of award fee earned accurately reflects the contractor’s
       performance.

       e. Justifying and documenting for the contract file any variances between the PEB
       recommendation and FDO determination.

       f. Signing the award fee determination letter specifying the amount of award fee earned
       and the basis for that determination for the evaluation period.

Performance Evaluation Board (PEB) - The PEB is established by the FDO. The PEB brings a
broader management perspective to the evaluation process than at the monitor level (and PEB
members should be at a higher management level than performance monitors). The qualifications
of PEB members will vary depending on the nature, dollar value and complexity of the contract.
The PEB should include at least members with overall responsibility for the technical and
contracting aspects of contractor performance. Board members should be familiar with the type
of work to be evaluated and be able to devote enough time to their assignment to perform
thorough and prompt reviews. The PEB should be established in sufficient time so it can
develop (or oversee development) and distribute an approved evaluation plan before the start of
the first evaluation period. PEB responsibilities include:

       a. Conducting ongoing evaluations of contractor performance based on Performance
       Monitor reports and additional performance information as may be obtained from the
       contractor and other sources. The PEB evaluates contractor’s performance according to
       the standards and criteria stated in the performance evaluation plan.

       b. Submitting a PEB report to the FDO covering the Board's findings and
       recommendations for an award fee amount for each evaluation period.

       c. Recommending appropriate changes in the performance evaluation plan for approval
       by the FDO (if plan changes are not delegated to the PEB), if any.

Performance Evaluation Board (PEB) Chair - The FDO designates one PEB member as the
Chair. The functions of a PEB Chair include:

       a. Scheduling PEB meetings, controlling attendance and chairing the meetings.

       b. Recommending appointment of nonvoting members to assist the PEB perform its
       functions, e.g., a recording secretary.

       c. Appointing monitors for the contract effort and assuring they are provided appropriate
       instructions and guidance.

       d. Requesting and obtaining performance information from other personnel involved in
       observing contractor performance, as appropriate.

       e. Obtaining help from other personnel to consult with the PEB, as needed.

       f. Preparing and obtaining approval of the PEB report and other documentation such as
       PEB minutes.

       g. Ensuring the timeliness of award fee evaluations.

Performance Monitors - Monitors provide continuous evaluation of the contractor’s
performance in specific assigned areas of responsibility. This often daily oversight is the
foundation of the award fee evaluation process. Performance monitors are specialists familiar
with their assigned areas of cognizance; their monitor duties generally are in addition to, or an
extension of, their regular responsibilities. In performing their duties, monitors should maintain
ongoing communication with their contractor counterparts, conduct assessments in an open,
objective and cooperative spirit, and emphasize applicable negative and positive performance
elements. Monitors are designated by the PEB Chair. Responsibilities of Performance Monitors
include:

       a. Monitoring (not directing), evaluating and assessing contractor performance in their
       assigned areas. This activity is conducted according to contract requirements and the
       award fee plan so that evaluations are fair and accurate.

       b. Periodically preparing a Performance Monitor report for the PEB and, if necessary,
       providing verbal presentations as well.

       c. Recommending any needed changes in the performance evaluation plan for
       consideration by the PEB and the FDO.

Performance Evaluation Coordinator (PEC) – In certain high dollar value, complex efforts,
the following organizational level also might be used. Performance Evaluation Coordinators
provide centralized direction to the various performance monitors and consolidate the findings of
the performance monitors for review at the next highest evaluation level. The PEC level should
be used only when a very large number of performance monitors are involved in the evaluation
process. Each PEC (appointed by the PEB Chair, with appropriate notification to the contractor)
is responsible for one of the broad functional areas to be evaluated, such as technical or project
management. PEC duties include:

       a. Furnishing instructions to performance monitors in their assigned areas.

       b. Ensuring that the contractor is promptly notified whenever a problem is identified
       requiring immediate contractor attention (However, PECs should not give technical
       direction unless they are designated contracting officer's technical representatives
       (COTRs) and their contracts contain a technical direction clause.).

       c. Coordinating, consolidating and analyzing data submitted by their performance
       monitors and preparing a concisely written PEC report for presentation to the next
       highest evaluation level for each evaluation period.

8. Training

All personnel involved in award fee administration should be trained on the process. Training
should begin before or immediately after contract award so that personnel understand the award-
fee process before beginning their duties. Training should cover the performance
evaluation plan, roles and responsibilities, documentation requirements, evaluation techniques,
and other areas such as:

      What is an award fee contract
      What is being evaluated
      How will information be gathered; what techniques will be used (e.g., inspection,
       sampling of work, observation, review of reports or correspondence, or customer
       surveys);
      When or how often will information be obtained (e.g., daily, weekly or monthly);
      How will performance monitors secure information from functional specialists to cover
       areas in which the monitors may not be personally involved; and
      Evaluation scoring processes and the need for consistency between scoring and
       evaluation summaries.

9. Steps in the Evaluation Process

Assuming the basic three-level organizational structure, the sequence of events leading to an
award fee determination is:

       a. A certain number of days before the period starts (specified in the performance
       evaluation plan), the contractor is provided with any changes to the performance
       evaluation plan. In addition, the PEB may determine that it wants to highlight a
       performance area that the contractor should pay particular emphasis to during the period.
       For instance, an area of performance during the period may be of particular risk to the
       program. The PEB may want to focus the contractor’s attention on this area of risk by
       highlighting it. This may be done by issuing a "letter of emphasis" to the contractor a
       certain number of days prior to the start of the evaluation period, if specified in the
       performance evaluation plan.

       b. During the course of the evaluation period, performance monitors track contractor
       performance. Interim (mid-term) evaluations may be used to identify strengths and
       weaknesses in the contractor’s performance during the period being evaluated. Interim
       evaluations are documented and should involve the FDO.

       c. At the end of the period, the performance monitors assess and document the
       contractor's performance, and report to the PEB.

       d. The PEB considers the performance monitors' reports and any other pertinent
       information, including information provided by the contractor during the evaluation
       period, and prepares a report for the FDO with findings and recommendations.

       e. The contractor may be allowed to comment on its performance during the evaluation
       period, using one or more of the following methods:

              The contractor may provide a written or oral self-assessment of its performance
               for consideration by the PEB.
               The contractor may be provided a copy of the PEB’s draft findings and
               recommendations and may be allowed to identify factual errors. Any errors
               identified by the contractor would be addressed by the PEB in its final report. The
               contractor’s draft recommendation is not a subject for negotiation; the PEB
               should not engage in discussions with the contractor.
              The contractor may be provided a copy of the final PEB report at the same time as
               the PEB submits it to the FDO. Contractor may submit comments directly to the
               FDO for consideration.
       f. The FDO meets with the PEB to discuss the PEB's report. The FDO then makes a final
       determination in writing for the amount of award fee earned and to be paid. The FDO
       provides the determination to the CO, who sends it to the contractor. The FDO's rating is
       provided to the contractor as quickly as possible after the end of the period being
       evaluated. The FDO and PEB should provide a debriefing to the contractor after the
       rating has been issued.

       g. Payment to the contractor should be made as soon as possible after the end of the
       period. The contractor submits a separate voucher for award fee to be paid.

10. Performance Evaluation Plan (PEP)

The performance evaluation plan (PEP) includes:

      Organizational structure for award fee administration
      Method for determining award fee, including evaluation criteria and periods
      Method for implementing any changes in plan coverage

The plan should be tailored to the particular situation and should:

      Focus the contractor on performance areas of greatest importance to motivate it to make
       the best possible use of company resources to improve performance;
      Provide for evaluations of contractor performance levels, taking into consideration
       contributing circumstances and contractor resourcefulness;
      Clearly communicate evaluation procedures and provide for effective, two-way
       communication between the contractor and the Government personnel responsible for
       evaluating performance and making award fee determinations;
      Provide for an equitable and timely evaluation process;
      Establish an effective organizational structure, commensurate with the complexity and
       dollar value of the particular procurement, to administer the award fee provisions; and
      Be kept as simple as feasible; the simpler the plan, the more effective it is likely to be.

11. Changing the Performance Evaluation Plan

The performance evaluation plan is usually not included in the contract. This gives FAA the
right to unilaterally alter the plan to reflect any changes in management emphasis. If the plan is
made a part of the contract, then FAA’s ability to unilaterally change the plan must be
specifically stated in the contract. Unilateral changes may be made to the plan if the contractor is
provided written notification by the CO before the start of the upcoming evaluation period.
Changes affecting the current evaluation period must be by mutual agreement of both parties.
All significant changes to the award-fee plan should be coordinated with the PEB and approved
by the FDO. Examples of significant changes include revising evaluation criteria, adjusting
weights to redirect contractor’s emphasis to areas needing improvement, changing PEB
membership, and revising the distribution of the award-fee dollars. It is important that the
provision for unilateral changes be clearly described in the contract. The fact that the plan can be
unilaterally changed does not give the FAA the right to unilaterally change other award fee
provisions or other terms of the contract, absent contract language allowing it to do so.

The Appendix to this guidance includes a sample PEP.

12. Performance Evaluation Factors

It is neither necessary nor desirable to include all functions required by the statement of work as
part of the performance evaluation plan. However, those functions selected should be balanced
so that a contractor, when making trade-offs between evaluation factors, assigns the proper
importance to all of the critical functions identified. For example, the plan should emphasize a
combination of technical performance and cost considerations, because an evaluation plan
limited to technical performance (alone) might result in increased costs out of proportion to any
benefits gained.

Spreading the potential award fee over a large number of performance evaluation factors dilutes
emphasis. Instead, broad performance factors should be selected, such as technical, project
management and cost control, supplemented by a limited number of subfactors describing
significant evaluation elements over which the contractor has effective management control.
Prior experience can be helpful in identifying those key problem or improvement areas that
should be subject to award fee evaluations.

Some basic areas of performance need to be evaluated and rewarded on every contract. Other
areas are critical only in some instances. Cost control will always be included as an evaluation
factor, if there isn't a separate cost incentive in the contract. In general, controlling the cost of the
system/equipment or service being provided, its quality (technical merit, design innovation,
reliability, etc.), and its timely delivery will always be important-- although their relative
importance and the measure of what constitutes good performance may vary. The relative
importance of the factors and the method of evaluating a contractor should be tailored to fit the
needs of individual procurement. For example, providing an item on time is generally critical to
the contract. However, earlier delivery might also be of benefit to the Government and worth
incentivizing. On the other hand, early deliveries might be of no benefit, or even cost the
Government money if companion technologies are not yet available resulting in increased costs
to the Government for storage.

The evaluation factors used in award fee should not be standardized. Rigid standardization tends
to generate evaluation plans that are either too broad or include factors inapplicable to a given
function. In either case, evaluators are likely to experience difficulties in providing meaningful
comments and ratings. It is preferable to tailor performance evaluation plans and factors to fit the
circumstances. As contract work progresses from one evaluation period into the next, the relative
importance of specific performance factors may change.

Depending on the situation, performance evaluation factors may include outcomes, outputs,
inputs or a combination of the three. An outcome factor is an assessment of the results of an
activity compared to its intended purpose. Outcome-based factors are the least administratively
burdensome type of performance evaluation factor, and should provide the best indicator of
overall success. Outcome-based factors should be the first type of evaluation factor considered,
and are often ideal for non-routine efforts.

An output factor is the tabulation, calculation, or recording of activity or effort and can be
expressed in a quantitative or qualitative manner. Output factors may be more desirable for
routine efforts. When output factors are used, care should be taken to ensure that there is a
logical connection between the reported measures and the program's mission, goals, and
objectives. Examples of outcome and output factors:

       Outcome: Safely install and ensure the lighting systems are certified and operational to
       satisfy needs.

       Output(s):

              Deliver lighting systems to airports no later than July 15, 2008.
              Assemble and certify lights at each airport not later than December 15, 2008.
              Install and ensure lighting compatibility at each airport by January 5, 2009.

       Outcome: Ensure program spare parts are maintained at a level sufficient to provide a 6-
       month supply at normal monthly draw down.

       Output: Store a minimum of 1,000 program spare parts.

Input factors refer to intermediate processes, procedures, actions or techniques that are key
elements influencing successful contract performance. These may include testing and other
engineering processes and techniques, quality assurance and maintenance procedures,
subcontracting plans, purchasing department management, and inventory, work assignment and
budgetary controls.

While it is sometimes valuable to consider input and output factors when evaluating contractor
performance, it is preferred to use outcome factors when feasible since they are better indicators
of success relative to the desired result. For example, in the case of service contracts where
performance is demonstrated and measurable in each evaluation period, input factors may be of
value in building a historical database, but may be of little or no value in the evaluation process.
Accomplishments, such as achieving small and small disadvantaged subcontracting goals, are
what are important, as opposed to efforts expended. In other contracts, however, where the
quality of performance cannot be determined with certainty until the end of the contract, input
factors can be useful indicators of how well the contractor is achieving its ultimate performance
objective. However, a heavy emphasis on input factors, while meant to provide positive
motivation to the contractor in certain areas of performance, may in some cases because the
contractor to divert its attention and focus from the overall output or outcome desired. Input
factors are not always true indicators of the contractor's ultimate performance and so should be
relied on with caution.
Some examples of performance evaluation factors, subfactors and criteria are shown below.
They do not cover all possibilities, but illustrate some of the key performance areas that can be
selected as evaluation factors.

Technical Performance - Accomplishment achieved in the areas of:

      Design: Approach in design concepts, analysis, detailed execution and low cost design
       and manufacturing. Design of test specimens, models and prototypes.
      Development: Conception/execution of manufacturing processes, test plans and
       techniques. Effectiveness of proposed hardware changes.
      Quality: Quality assurance, e.g., appearance, thoroughness and accuracy, inspections,
       customer surveys.
      Technical: Meeting technical requirements for design, performance and processing, e.g.,
       weight control, maintainability, reliability, design reviews, test procedures, equipment,
       and performance.
      Processing Documentation: Timely and efficient preparation, implementation and
       closeout.
      Facilities/GFE: Operation and maintenance of assigned facilities and Government
       Furnished Equipment.
      Schedule: Meeting key program milestones and contractual delivery dates; anticipating
       and resolving problems; recovery from delays; reaction time and appropriateness of
       response to changes.
      Safety: Providing a safe work environment; conducting annual inspections of all
       facilities; maintaining accident/incident files; timely reporting of mishaps; providing
       safety training for all personnel.
      Information Management: Ability of computer system to provide adequate, timely and
       cost effective support; meets security requirements; management information systems
       ensures accurate, relevant and timely information.
      Material Management: Efficient and effective processing of requisitions, with emphasis
       on priority requisitions; responsiveness to changes in usage rates.

Project Management - Accomplishment achieved in the areas of:

      Program Planning/Organization/Management: Assignment and utilization of personnel;
       recognition of critical problem areas; cooperation and effective working relationships
       with other contractors and Government personnel to ensure integrated operation
       efficiency; support to interface activities; technology utilization; effective use of
       resources; labor relations; planning, organizing and managing all program elements;
       management actions to achieve and sustain a high level of productivity; response to
       emergencies and other unexpected situations.
      Compliance with contract provisions: Effectiveness of property and material control,
       Equal Employment Opportunity Program, Minority Business Enterprise Program, system
       and occupational safety and security.
      Effectiveness in meeting or exceeding small business and small disadvantaged business
       subcontracting goals.
      Subcontracting: Subcontract direction and coordination. Purchase order and
       subcontractor administration.
      Timely and accurate financial management reporting.

Cost Control – Cost control is generally not a basis for an award fee. However, for the purposes
of performance evaluation factors, the acquisition team may consider the contractor's ability to
control, adjust and accurately project contract costs (estimated contract costs, not budget or
operating plan costs) through:

      Control of indirect and overtime costs. o Control of direct labor costs.
      Economies in use of personnel, energy, materials, computer resources, facilities, etc.
      Cost reductions through use of cost savings programs, cost avoidance programs, alternate
       designs and process methods, etc.
      "Make versus buy" program decisions.
      Reduced purchasing costs through increased use of competition, material inspection, etc.

The predominant consideration when evaluating cost control should be an objective
measurement of the contractor's performance against the estimated cost of the contract, including
the cost of undefinitized contract actions when appropriate. The estimated cost baseline should
be adjusted to reflect cost increases or decreases associated with changes in Government
requirements or funding schedules which are outside the contractor's control. In rare
circumstances, contract costs might increase for reasons outside the contractor's control and for
which the contractor is not entitled to an equitable adjustment, such as weather-related. Such
situations should be taken into consideration when evaluating contractor cost control. In the case
of contracts for services where contractor performance is consistent and complete within each
evaluation period and does not carry over into succeeding periods, negotiated estimated cost can
generally be apportioned among the evaluation periods. Cost control for each evaluation period
can then be measured against that period's share of the estimated costs. However, where
contractor performance cannot be ascertained until the end of the contract (such as contracts for
R&D) and cost expenditures can vary significantly from one evaluation period to the next, it
makes more sense to evaluate interim contractor cost control against a cumulative expenditure
profile that reflects the estimated cost.

13. Quantitative and Qualitative Standards

Once evaluation factors are selected, standards or criteria are developed for measuring contractor
performance and assessing the amount of award fee earned.

Quantitative or objective performance measurement standards are based on well-defined
parameters for measuring performance. They include customer surveys, inspection reports and
test results. Quantitative measures should be used whenever the given performance can be
precisely or finitely measured. Sufficient information or experience must be available to permit
the identification of realistic standards against which quantitative measurements may be
compared.
Unlike the predetermined targets and fee adjustment formulas used in incentive fee type
contracts, any comparison of contractor performance against quantitative standards in the award
fee environment will need to be tempered by a qualitative evaluation of existing circumstances.
Quantitative measurements are not a substitute for judgment. Keep in mind that any reasonable
assessment of effectiveness requires an evaluation process encompassing both performance
levels and the conditions under which those levels were achieved. To be realistic, any standard
(or range of acceptable performance levels) should reflect the nature and difficulty of the work
involved.

Qualitative or subjective performance standards rely on evaluator's opinions and impressions of
performance quality. Qualitative assessments must be as informed as possible and not rely on
personal bias or a purely intuitive feeling. Some examples are:

      Staffing: Optimal allocation of resources; adequacy of staffing; qualified and trained
       personnel; identification and effective handling of employee morale problems; etc.
      Planning: Adequate, quality, innovative, self-initiated and timely planning of activities;
       effective utilization of personnel; quality of responses; etc.

Another example of a qualitative standard is a "quality review" such as a questionnaire requiring
"yes" or "no" answers, with a high proportion of "yes" answers indicative of high quality
performance. Note that narrative support for questionnaire answers is required.

Where feasible, the quantitative or objective measures are preferred over qualitative or subjective
ones. The greater the ability to identify and quantify the facts considered in arriving at a
judgmental assessment, the more credible that assessment is likely to be (and the easier it will be
to prepare the supporting documentation required).

14. Weighting Evaluation Factors

In addition to identifying how performance will be evaluated and measured, the detailed
performance evaluation plan should indicate the relative priorities assigned to the various
performance areas and evaluation factors and subfactors. This may be accomplished through the
use of narrative phrases such as "more important," "important," and "less important" or through
percentage weights. When percentages are used, the plan should state that they are for the sole
purpose of communicating relative priorities, and do not imply an arithmetical precision to the
judgmental determinations of overall performance quality and the amount of award fee earned.

Cost control should always be a substantial factor. When percentage weights are used, cost
control could be at least 25 percent of the total award fee. When adjectives or narratives are used
in lieu of explicit weights, cost control should be a substantial factor. No other factor should be
less than 10 percent. This ensures that the factors are balanced and, when making trade-offs, the
contractor assigns the proper importance to all factors.

The methodology used to establish percentage weights is illustrated in the following example:

Example:
First, list the primary evaluation factors in descending order of importance and assign a
percentage weight to each factor starting with the most important. Assign the least important
factor no less than 10 percent (unless the least important factor is cost control, which would be
assigned a minimum of 25 percent). All assigned weightings for primary evaluation factors must
total 100 percent. Round all numbers off to the nearest whole number to avoid giving the
impression that the procedure is a precise one.

Next, assign percentage weights to the subfactors supporting each of the primary evaluation
factors such that the total of the subfactor weights for each performance factor totals the assigned
weight for that factor as shown in the example below. The actual factors and subfactors used as
well as the weights assigned in any given contract may be different from those shown in the
example. For instance, indirect cost control, subcontract costs, other direct costs, etc. should be
evaluated when they are significant elements of cost.

                       Factors/Subfactors           Assigned Weight
                       Technical                  42%
                         Design                                       24%
                         Quality                                      12%
                         Schedule                                     6%
                       Project Mgmt.              32%
                         Planning                                     26%
                         Subcontracts                                 6%
                       Cost Control               26%
                         Labor Cost Control                           15%
                         Overhead Cost Control                        11%
                                    Total         100%


15. Length of Evaluation Periods

Award fee evaluation periods should generally be between three to six months. Too short of an
evaluation period can be administratively burdensome and lead to hasty or late evaluations which
result in late fee determinations. Alternatively, evaluation periods may be tied to completing
milestones. When linking evaluation periods to milestones, ensure evaluations do not occur at
infrequent intervals or become subject to lengthy slippage.

16. Allocation of Award Fee

After the total award fee amount is established, the total pool is allocated over the award fee
evaluation periods. For contracts where each evaluation is final, the allocation of award fee
determines its distribution for final payment purposes. For other contracts, where all evaluations
(and payments) are interim, except the final evaluation, award fee is allocated among the
evaluation periods solely for the purpose of making interim payments against the final
evaluation. That final evaluation will determine the amount of total award fee actually earned by
the contractor and will supersede any interim evaluations and payments made.
The distribution of the award fee pool depends on the circumstances. Contractor expenditure
profiles may be considered. The total may be allocated equally among the evaluation periods if
the risks and type of work are similar throughout the various evaluation periods. Otherwise, if
there is a greater risk or critical milestones occur during specific evaluation periods, a larger
portion of the pool may be distributed to those periods. This permits the Government to place
greater emphasis on those evaluation periods. For example, if a contract has a short initial
evaluation period for the contractor to become familiar with the work, the initial period of
performance may have a smaller allocation while the remaining pool is divided equally among
the remaining evaluation periods. If the schedule for a significant event changes, any potential
award fee amount associated with that event must be reallocated accordingly for interim payment
purposes.

The following example illustrates an unequal allocation of award fee among the four
performance periods, reflecting different degrees of emphasis.

Estimated Cost                        $5,000,000
Base Fee (0%)                                0
Total Award Fee (10%)                 $ 500,000
                 Total                $5,500,000


                                          Evaluation Periods

                            1             2            3              4             Total
   Allocation (%)           10%           26%          40%            24%           100%
   Allocation ($)           $50,000       $130,000     $200,000       $120,000      $500,000

17. Evaluation of Delivery or Task Order Contracts

A delivery or task order contract may provide for orders with specific requirements that are
independent of any other orders’ requirements and that have separate, distinct sources of
funding. For such orders, an award fee amount could be allocated to each individual order along
with the estimated cost. Contractor performance on each order would be evaluated against the
award fee criteria on a task-by-task basis. There are instances where the Government wants to
motivate the contractor’s performance at the contract level versus each individual order. This
condition may exist when the overriding objective is not how each individual order is executed,
but how the contractor’s performance of multiple orders contributes to meeting the overall
contract objectives. For example, it may not be cost effective to evaluate contractor performance
on a task order basis, or when unknown/undefined requirements may materialize during the
contract. An unknown requirement may arise that has a higher priority than an existing order.
The primary objective is for the Government/contractor team to make trade-offs between the
orders in a constrained environment (funding, staffing, etc.) to ensure the optimal capability is
achieved at the system performance level. Therefore, the ultimate measure of success is judged
as meeting the overall contract objectives and not necessarily on the performance of a single
order. In this case it is in the Government’s best interest to incentives the contractor to focus its
efforts and perspective on overall contract performance versus the individual orders. This does
not preclude management of individual orders. To ensure that there is no confusion about how
the contractor’s performance will be evaluated, the award fee plan must clearly state whether the
evaluation criteria are applicable at the contract or individual order level.

18. Interim and Final Evaluations

The decision about whether to conduct interim or final evaluations depends on the circumstance.
In service contracts, the contract deliverable is a service and contractor performance is
measurable at each evaluation period. Performance is usually not cumulative and its quality
cannot be improved or reduced by future performance. For that reason, in service contracts,
evaluations should be final and unearned award fee cannot be "rolled over" into subsequent
evaluation periods or ever retroactively "taken back." On other contracts such as study, design or
hardware, where the true quality of contractor performance cannot be measured until the end of
the contract, the contract deliverable is an end item. Contractor performance leading up to
delivery of the end item is an indication of whether and how well it will produce the end item,
but it is not the end item itself. Since the actual quality of the end item cannot be determined
until the end of the contract when it is delivered, the last evaluation should be final. All other
evaluations and ratings would be interim.

At the end of the contract, the contractor's total performance is evaluated against the performance
evaluation plan to determine total earned award fee. That final rating supersedes all interim
ratings. It is not the average of the interim ratings. Instead, it reflects the contractor's position at
the end of the contract rather than its interim progress toward that position. For example, how
well a contractor has controlled costs can only be determined at the end of the contract when the
contractor is evaluated against its final cost position. Whether the contractor was overrunning or
underrunning the contract estimated cost at various points in time is irrelevant. The contractor's
success is measured against the end result. Likewise, the contractor's ability to meet the contract
schedule is determined when the hardware is delivered and accepted by the Government.
Whether the contractor was behind or ahead of schedule during the course of the contract is not
relevant in the final evaluation. The same thing is true of the other evaluation factors and
subfactors.

Any significant events that contributed over the course of the contract to the contractor's position
(such as delays in receipt of Government furnished equipment), should be considered in the final
award fee determination. Those events should be examined as they relate to the final contract
outcome and not to the individual evaluation periods in which they occurred.

19. Grading and Scoring Contractor Performance

Grading and scoring methods are used to translate evaluation findings into recommended award
fee amounts or ranges. The purpose is to help the FDO decide the amount of award fee earned.
These methods are evaluation tools and are not a substitute for judgment in the award fee
determination process. The decision process cannot be reduced to a mathematical formula or
methodology. Either a weighted or nonweighted process can be used to evaluate performance.

One method is for evaluators to start from the satisfactory performance level and adjust the
scores upwards or downwards, depending on the contractor's performance for the period. A
rating table may be used as a guide. Another method is for evaluators to use "blind" evaluation
sheets where they are asked to rate different criteria using numbers based on the adjectival
ratings. The weights that will eventually be applied to their ratings do not appear on the sheets.
This approach relieves to some extent the pressure placed on the evaluators by contractor
employees.

As a general guideline, a contractor which satisfactorily meets its contractual commitment will
fall into the "good" (71-80) range. To earn an "excellent" score (91-100), a contractor must
provide exceptional performance--a combination of excellent cost, schedule and technical
management. Some general considerations in the development of a grading and scoring
methodology are as follows:

      When Government actions impact contractor performance either positively or negatively,
       e.g., changes in funding allocation or increased emphasis on certain technical
       requirements which require the contractor to make unexpected and extensive tradeoffs
       with other technical requirements, those actions should be considered in the scoring and
       grading process.
      The methodology should be kept as clear and simple as possible. In particular, the
       situation where specially tailored evaluation factors are force-fit to a "standard" grading
       table or scoring formula should be avoided.
      The maximum fee should be attainable by the contractor. To be a credible and effective
       motivator, an award fee contract should provide the contractor with a reasonable
       opportunity to earn the maximum award fee available. Although a reasonable opportunity
       generally does not mean absolute perfection in all possible performance areas, the
       contractor's performance should be outstanding in virtually all areas. On the other hand,
       providing a contractor the maximum fee on every contract, does not adequately address
       the issues of risk and effort.
      Documentation of assigned performance values is required in support of award fee
       recommendations and computations.

20. Award Fee Conversion Table

An award-fee conversion table may be used to translates overall evaluation scores (i.e.,
numerical performance points) into the earned award-fee amount. This conversion may be linear
(e.g., direct conversion of evaluation points to percentage of award fee earned) or non-linear
(e.g., a formula to translate performance points to award fee earned). Use of a conversion table
does not remove the element of judgment from the award-fee process. Regardless of the method
used, zero award fee will be earned for an overall unsatisfactory performance.

The following rating table may be used as a guide for award fee. Earned award fee (or interim
award fee amounts in the case of interim evaluations) is calculated by applying the total
numerical score to the award fee pool. For example, a numerical score of 85 yields an award fee
of 85 percent of the award fee pool available for that evaluation period. The table below lists the
award fee evaluation adjectival ratings with their corresponding score ranges. In addition, a
narrative description is also provided to assist the PEB in applying the ratings. Criteria for
evaluation factors and subfactors should reflect the table.
Adjective           Range of
                                              Description
Rating              Performance Points
                                              Of exceptional merit; exemplary performance in a timely,
                                              efficient and economical manner; very minor (if any)
Excellent           (100-91)
                                              deficiencies with no adverse effect on overall
                                              performance.
                                              Very effective performance, fully responsive to contract
                                              requirements ; contract requirements accomplished in a
Very Good           (90-81)
                                              timely, efficient and economical manner for the most part;
                                              only minor deficiencies.
                                              Effective performance; fully responsive to contract
Good                (80-71)                   requirements; reportable deficiencies, but with little
                                              identifiable effect on overall performance.
                                              Meets or slightly exceeds minimum acceptable standards;
Satisfactory        (70-61)                   adequate results; reportable deficiencies with identifiable,
                                              but not substantial, effects on overall performance.
                                              Does not meet minimum acceptable standards than in one
Poor/                                         or more areas; remedial action required in one or more
                    (less than 61)
Unsatisfactory                                areas; deficiencies in one or more areas which adversely
                                              affect overall performance.




No fee will be paid when the total evaluation score is less than 61. In addition, any factor that
receives a score of less than 61 for "poor/unsatisfactory" performance will not be rewarded and
converted to a factor score of zero. Such zeroing-out should not be done at the subfactor level.

21. Scoring of Cost Control

Cost control should be a substantial factor in any performance evaluation plan, except when a
fixed-price incentive or cost plus incentive fee contract is used. The contractor's success in
controlling costs must be measured against contract estimated costs, and not against budgetary or
operating plan costs. The following scoring guidelines will help ensure that cost control receives
the proper emphasis:

a. Whenever there is a significant cost overrun that was within its control, a contractor should be
given a score of zero. If the overrun is insignificant, a higher score may be given. The reasons for
the overrun and the contractor's efforts to control or mitigate the overrun should be considered in
the evaluation.

b. Cost underruns within the contractor's control should normally be rewarded. However, the
extent to which an underrun is rewarded will depend on the size of the underrun and the
contractor's level of performance in the other award fee evaluation factors. Contractors should
not be rewarded for excelling in cost control to the detriment of other important performance
factors. For that reason, whether a cost underrun is rewarded in the evaluation process and, if so,
the degree to which it is rewarded depends, not only on the size of the underrun, but also on how
well the contractor is performing overall in the other evaluation areas.
c. When the contractor achieves the negotiated estimated cost of the contract, it should not
receive the maximum score for cost control. The maximum score for cost control should only be
awarded for achieving an underrun. Some lesser score will be assigned, reflecting the degree to
which the contractor has prudently managed costs while meeting contract requirements.

22. Example - Calculating Earned Fee

The following example illustrates how evaluation scores for weighted factors and subfactors are
calculated to arrive at a total award fee recommendation. Again, keep in mind that the use of
weighted factors to calculate an award fee amount is an evaluation aid; the result does not
represent a required award fee amount.

a. Background: This CPAF contract covers design and verification testing of hardware. The
contractor is also required to deliver eight production items. The total estimated cost and award
fee is $300,000,000. The available award fee for the current interim evaluation period (#7) is
$2,600,000. Evaluation factors and assigned weights are:

               Evaluation Factor/                                Assigned
               Subfactor                                         Weight
               Technical                                         42%
                                       Design                                  24%
                                       Quality                                 12%
                                       Schedule                                 6%
               Project Management                                32%
                                       Planning                                26%
                                       Subcontracts                             6%
               Cost Control                                      26%
                                       Labor Cost Control                      15%
                                       Overhead Cost Control                   11%


b. PEB Findings: The findings of the PEB for the most recent evaluation period are summarized
below:

Contractor performance was rated very strong overall in the technical area. Accomplishments
included successful design and installation of in-flight wear monitors, and successful test of a
redesigned turbo pump. Some weaknesses were identified, the most serious of which was an
incompatibility between two components which was not resolved during the period, resulting in
a slight schedule slip.

In the area of project management, strengths were identified, including communication of
program activities to the proper management levels, on-schedule delivery of critical
subcontracted hardware, and exceeding subcontracting goals. Weaknesses included ineffective
checks and balances for processing hardware and insufficient management involvement at
vendor sites which has jeopardized hardware integrity.
In the cost control area, the cost overrun increased by 14% in this period due in large part to
labor costs. Projected overhead increases were also reported; however, the contractor has
identified and will implement cost reduction measures which are expected to ameliorate the
problem. (Note - promises of future actions are not normally considered in the current period
evaluation, but in this case the overhead increase is also only a projection.)

c. Calculating Weighted Performance Points: As a result of the evaluation, the following
performance points were assigned and weighted for the subfactors:

                                                                                    Weighted
                   Performance                Assigned
     Subfactor                                                                      Performance
                   Points                     Weights
                                                                                    Points*
    Design         95 (Excellent)             .24                                   54
    Quality        90 (Very Good)             .12                                   26
    Schedule       80 (Good)                  .06                                   11
                                              Total for Technical                   91
    Planning       70 (Satisfactory)          .26                                   57
    Subcontracts   86 (Very Good)             .06                                   16
                                              Total for Project Mgmt                73
    Labor Cost
                   50 (Poor/Unsat.)           .15                                   29
    Control
    OH Cost
                   70 (Satisfactory)          .11                                   30
    Control
                                              Total for Cost Control                59 = 0**


*Weighted Performance Points are calculated as follows: (Performance Points x Assigned
Subfactor Weight)/Assigned Factor Weight = Weighted Performance Points. For example, for
Design: (95 x .24)/.42 = 54

** Note that an unsatisfactory rating for a factor results in a zero score for that factor. The Cost
Control factor received a zero score for receiving a rating of less than 61 percent. Significant cost
overrun within the contractor's control should result in a score of zero for cost control.

Next, total weighted performance points were calculated for the primary evaluation factors as
follows:

Weighted            Performance              Assigned               Total Weighted
                                       x                     =
Factor              Points                   Weight                 Performance Points
Technical           91                 x     .42             =      38
Project Mgmt.       73                 x     .32             =      23
Cost Control        0                  x     .26             =      0
                                             Total for All
                                                                    61 (Sat.)
                                             Factors

d. Converting Performance Points to Award Fee Score: The award fee percentage is the same
number as the total weighted performance points. In this example, 61 weighted performance
points equals 61% of available award fee. Award fee recommendation: $1,586,000 (61% of
$2,600,000).

23. Example - Changes in Emphasis

If the Government's relative priorities change as work progresses from one phase into the next,
or as unexpected problems or developments occur, such as schedule slippages, the evaluation
plan may be revised on a unilateral basis, to communicate such changes to all parties. The
following example illustrates how the Government can adjust evaluation weights to redirect
contractor emphasis to areas needing improvement and the effect of that readjustment on earned
award fee.

Estimated Cost                           $5,000,000
Base Fee (0%)                                     0
Total Award Fee (10%)                    $ 500,000
                 Total                   $5,500,000


                                               Evaluation Periods

                                     1                     2          3            4             Total
  Allocation (%)                     24%                   18%        18%          40%           100%
  Allocation ($)                     $120K                 $90K       $90K         $200K         $500K




                                               Evaluation Period 1:

                                                                                               Weighted
 Factor                  Weight      x                        Performance Points       =       Performance
                                                                                               Points
 Technical               .42         x                        91 (Excellent)           =       38
 Project Mgmt            .32         x                        73 (Good)                =       23
 Cost Control            .26         x                        0 (Poor/Unsat.)          =       0
                                                              Total                            61


The contractor earns $73,200, 61% of $120,000.

                                             Evaluation Period 2:

If factor weights were adjusted to increase the emphasis on cost control and its performance, and
thus its performance points, remained basically the same, this would be the result:

                                                                                           Weighted Performance
 Factor                        Weight      x          Performance Points           =
                                                                                           Points
 Technical                     .40         x          91                           =       36
 Project Mgmt                  .32         x          73                           =       23
Cost Control              .28         x     0                          =     0
                                            59                         =     0


The contractor would receive an award fee score of 2 percentage points less in the second period
than it would have if the factor weights had not changed. As a result, the contractor would
receive an overall score of Poor/Unsatisfactory and no award fee for the second period.

Now, assume that the contractor responds to the shift in emphasis by improving its performance
in cost control from Poor/ Unsatisfactory to minimally satisfactory, without reducing its score in
any other area, as follows:

                                                                                 Weighted
Factor                    Weight       x     Performance Points         =
                                                                                 Performance Points
Technical                 .40          x     91                         =        36
Project Mgmt              .32          x     73                         =        23
Cost Control              .28          x     61                         =        17
                                                                                 76 (Good)


By increasing its performance in cost control by 31 points (from 30 to 61) - and as a result, it’s
total score by 17 percent to Good--the contractor is now entitled to receive an award fee
payment.

If the cost control weight had not been increased in the second period, the contractor would have
continued to be paid fee (61 percent of $90,000 or $54,900) for unsatisfactory cost control
performance. By changing the factor weights to put more emphasis on cost control, the
contractor is either rewarded for improved cost control with more fee than it would have
received had the weights had not been changed (76% of $90,000 or $68,400) or penalized for not
showing improvement in that area (59 percent = no award fee payment for the period).

24. Communication

A properly structured and administered award fee contract provides effective communication
among Government and contractor personnel at management levels, where decisions can be
made and results achieved. A post-award conference is one way to establish communication
channels early and to ensure key Government and contractor personnel understand their
responsibilities. Attendees should review and discuss the performance evaluation plan and
contract requirements. Frequent and honest communication is essential, both between the
Government and contractor and within their respective organizational frameworks. Both
Government and contractor personnel should be encouraged through the award fee process to
identify potential problems as promptly as possible (as opposed to withholding such "bad news"
for fear it might result in unfavorable criticism).

25. Contractor Input

The contractor may be allowed to furnish a self-assessment of its performance. Once the PEB
report is prepared, the PEB may also allow the contractor to comment on the draft report.
Contractor participation at this point ensures all pertinent data has been considered and no factual
errors were used as a basis for decisions. Such communications, however, must not result in
negotiation of award fee ratings. The ratings should be fair and reasonable, but are ultimately a
unilateral Government determination. Throughout the period of performance, the contractor may
be permitted to submit suggestions for improving or changing the evaluation process. In addition
to the various formal communications channels, both parties should recognize that frequent, less
formal discussions are valuable in ensuring ultimate program success. Both the Government and
the contractor should work to eliminate any unnecessary contractual, organizational or
conceptual barriers that constrain information sharing and other communications needed for
successful joint problem solving.

26. Timeliness

The timeliness of award fee evaluations is critical. Long delays minimize any benefits from
periodic evaluations and reports. Unless evaluation results are transmitted timely and award fee
payments made promptly, the results and payments may not have the desired influence on the
contractor's performance during subsequent evaluation periods. The timeliness of changes in the
evaluation plan is also important. Proposed changes should be processed expeditiously and the
contractor notified in advance of the evaluation period to which they apply.

27. Documentation

Performance monitors should consider the following when preparing their reports. These
questions can help assure evaluation data are complete and accurately assess how well the
contractor performed in the monitors' assigned areas during the period.

      What (in the monitor's area) was the contractor supposed to do during the period? What
       was actually accomplished?
      How critical are the efforts accomplished, or not accomplished, by the contractor?
      What was the impact of any efforts completed early or late? How critical was the time
       frame involved?
      How well did the contractor perform the tasks that were accomplished?
      What are the major strengths and weaknesses (in sufficient detail to discuss with the
       contractor)?
      Were any Government-directed changes made or did any obstacles arise which impacted
       performance? What corrective actions were implemented? How effective were they?
      Has the contractor efficiently and effectively used available resources (e.g., personnel and
       facilities) to improve its performance?
      Has the contractor's performance been clearly assessed in regard to all tasks and specific
       objectives?
      On level-of-effort contracts, what has the contractor accomplished for the dollars spent
       (The emphasis here is to reward the contractor for accomplishments, not to reward the
       spending of dollars.)

The reporting formats used by monitors should be structured to ensure accuracy and clarity.
Where possible, several evaluation parameters may be consolidated in a single format.
Consistency can be achieved by using the same general format for all closely related work at a
given activity. However, caution is required here. Carefully tailored evaluation plans can be
compromised by inflexible and ill-conceived rating formats. Any format adopted should provide
a place for the monitors to make narrative comments. These narrative comments provide
detailed, pertinent information not addressed in the completed format. For example, they cover
the circumstances under which reported performance levels were achieved, especially if these
circumstances were abnormal in any way. These comments also discuss the contractor's
efficiency in managing assigned personnel and other resources. Enough detail should be included
in reports to the PEB to ensure that their findings and recommendations are accurate and fair and
can be supported to the FDO.

Appropriate documentation is vital to support the PEB’s recommendations, particularly when
these recommendations differ from the conclusions reported by cognizant monitors. Minutes of
meetings or other documentation should summarize the information reviewed, including any
additional or explanatory information provided by the contractor and the consideration given to
all such information. Since the evaluation is a judgment based upon all pertinent information,
that information needs to be identified, discussed and substantiated in the documentation. The
FDO will want to review the documentation to satisfy any concerns regarding contractor
performance before deciding whether to accept the recommended award fee or some higher or
lower amount. Examples of what the FDO might look for include:

      The facts that led to the assignment of a poor/unsatisfactory rating in any subfactor;
      The rationale for a poor/unsatisfactory rating as opposed to a satisfactory rating; and
      The circumstances under which a poor/unsatisfactory level was achieved and the
       relationships, if any, between it and any excellent performance levels reported for other
       subfactors.

Sufficient documentation should be provided to the FDO on which to base a decision and to
explain that decision to the contractor. Similarly, the FDO must document the basis for the
determination, especially in situations involving a contractor rebuttal of PEB findings and
conclusions or an award fee determination different from that recommended by the PEB.
Documentation of interim ratings may be less detailed since they will be superseded by the final
rating at the end of the contract.

28. Payment

Final award fee payments and interim payments against interim evaluations should be made
generally within 60 days after the end of the evaluation period for which payment is being made.

When the total rating for an evaluation period is "poor/unsatisfactory," no award fee is paid for
that period. For example, a total award fee rating of 57 (“poor/unsatisfactory”) would yield an
award fee of zero, not 57 percent. For certain contracts involving delivery of a final product,
such as hardware, design or study, no award fee will be paid for a final evaluation rating of
"poor/unsatisfactory." In these cases, any provisional award fee payments made as a result of
"satisfactory" or better ratings (61 and above) on interim evaluations are to be repaid by the
contractor.
The amount of interim award fee paid each period will not exceed the interim evaluation score
(applied as a percentage) or 80 percent of the award fee allocated to the period, whichever is less.
No further award fee payments will be made when the CO determines that the total amount of
interim payments made to date will substantially exceed the amount which would be paid based
upon the anticipated final evaluation score. The PEB should be notified of such a determination.
The CO's determination should be based on a comparison of award fee amounts paid to actual
evaluation scores to date, projected future scores based on a combination of past performance
trends and any known data which might have an influence on future performance, and any other
pertinent data. Stopping award fee payment serves two purposes: it ensures that contractors will
not receive award fee which they have not earned and to which they will ultimately not be
entitled, and it minimizes the award fee that will be owed the Government by the contractor at
the end of the contract.

29. Provisional Payments

Long evaluation periods may require FAA to make award fee payments more frequently than at
the end of each evaluation period. These provisional payments, representing a percentage of the
award fee amount allocated to each evaluation period, are made at regular intervals during each
period. They are superseded at the end of each period by the interim or final award fee
determination amount. The percentage of allocated award fee to be paid provisionally will be
stipulated in the contract and may not exceed 80 percent of available award fee in any period.

Provisional payments are discontinued during any period in which the Government determines
that the total provisional payments made during that period will substantially exceed the amount
which would be paid based upon the anticipated evaluation score for the period. In the event the
amount of provisional payments made exceeds the amount of the award fee determination for
that period, the contractor will either credit the next payment voucher for the amount of the
overpayment or refund the difference.

30. Contract Termination

If a contract with award-fee is terminated for convenience after the start of an award-fee
evaluation period, the earned award-fee amount should be determined by the FDO using the
normal award-fee evaluation process. The remaining available award-fee dollars for all
subsequent evaluation periods should not be considered available or earned and, therefore,
should not be paid.

                                               END


3 Appendix - Sample Award Fee Performance Evaluation Plan Added 7/2008

                     SAMPLE PERFORMANCE EVALUATION PLAN

Contract No. _____________ with ______________
I. Introduction

II. Organizational Structure for Award Fee Administration

III. Evaluation Requirements

IV. Method for Determining Award Fee

V. Changes in Plan Coverage

Attachments

       III-A Evaluation Periods and Maximum Available Award Fee for Each Period

       III-B Performance Areas and Evaluation Criteria

       III-B.1 Evaluation Criteria for Performance Area No.

       III-C Grading Table

       IV-A Actions and Schedules for Award Fee Determinations

       IV-B General Instructions for Performance Monitors

APPROVED BY:

__________________________                   __________

(Signature)                                    (Date)

Fee Determination Official

__________________________

(Typed Name and Title)



I. Introduction

1. This plan covers administration of award fee provisions of Contract No.______ , dated ______
, with ______. The contract was awarded in accordance with the provisions of SIR No. ______.

2. The following matters, among others, are covered in the contract:

       a. The contractor is required to (brief statement describing the scope of contract).
       b. The contract term is from ______through ______ .

       c. The estimated cost of the contract is $ ______ .

       d. The base fee is $ ______ .

       e. The award fee, excluding base fee, is $ ______ .

       f. The estimated cost, base fee (if any), and award fee are subject to equitable
       adjustments arising from changes or other contract modifications.

       g. The award fee payable will be determined periodically by the Fee Determination
       Official (FDO) in accordance with this plan.

       h. Award fee determinations are not subject to the Disputes clause of the contract.

       i. Unearned award fee for each evaluation period is forfeited and cannot roll-over to
       subsequent periods.

       j. The FDO may unilaterally change this plan, as covered in Part V and not otherwise
       requiring mutual agreement under the contract, provided the contractor receives notice of
       the changes at least ______ (insert number of days) work days prior to the beginning of
       the evaluation period to which the changes apply

       k. The award fee will be provided to the contractor through contract modifications and is
       in addition to the (type of contract) provisions of the contract.

       (Note: The statements at 2.a through 2.f. can be revised as necessary to address any
       option(s))

II. Organizational Structure for Award Fee Administration

The following organizational structure is established for administering the award fee provisions
of the contract.

1. Fee Determination Official (FDO)

       a. The FDO is ______ (insert title, not name).

       b. Primary FDO responsibilities are: (1) Determining the award fee earned and payable
       for each evaluation perio; and (2) Changing the matters covered in this plan, as
       appropriate.

2. Performance Evaluation Board (PEB)
            a. The Chair of the PEB is______ (insert title). The following are voting members:
            ______ (insert titles).

            b. The Chair may recommend appointment of non-voting Members to assist the Board
            perform its functions.

            c. Primary responsibilities of the Board are: (1) Conducting periodic evaluations of
            contractor performance and submitting a Performance Evaluation Report to the FDO
            covering the Board's findings and recommendations for each evaluation period; and (2)
            Considering changes to this plan and recommending those it determines appropriate for
            adoption by the FDO.

    3. Performance Monitors

            a. One or more monitors will be assigned to each performance area to be evaluated. The
            assignment will be made by the PEB Chair.

            b. Each monitor will comply with the General Instructions for Performance Monitors,
            Attachment IV-B, and any specific instructions of the PEB Chair.
            Primary responsibilities of Monitors are: (1) Monitoring, evaluating and assessing
            contractor performance in assigned areas; (2) Periodically preparing a Performance
            Monitor Report for the PEB, or others as appropriate; and (3) Recommending appropriate
            changes in this plan for consideration.

    III. Evaluation Requirements

    The applicable evaluation requirements are attached as indicated below.

Requirement                                                                                Attachment
Evaluation Periods and Maximum Available Award Fee for Each Period                         III-A
Performance Evaluation Factors and Evaluation Criteria                                     III-B
Evaluation Criteria for Performance Evaluation Factor No.                                  III-B.1
Grading Table                                                                              III-C

    The percentage weights indicated in Attachment III-B and the Attachment III-C grading table are
    quantifying devices. Their sole purpose is to provide guidance in arriving at a general assessment
    of the amount of interim or final award fee earned. In no way do they imply an arithmetical
    precision to any judgmental determination of the contractor's overall performance and amount of
    interim or final award fee earned.

    IV. Method For Determining Award Fee

    A determination of the award fee earned for each evaluation period will be made by the FDO
    within ______ (insert days) after the end of the period. The method to be followed in monitoring,
    evaluating and assessing contractor performance during the period, as well as for determining the
award fee earned or paid, is described below. Attachment IV-A summarizes the principal
activities and schedules involved.

1. The PEB Chair should ensure a monitor is assigned for each performance evaluation factor or
subfactor to be evaluated under the contract. Monitors will be selected on the basis of their
expertise relative to prescribed performance area emphasis. Normally, monitor duties will be in
addition to, or an extension of, regular responsibilities. The PEB Chair may change monitor
assignments at any time without advance notice to the contractor. The PEB Chair will notify the
contractor promptly of all monitor assignments and changes.

2. The PEB Chair will ensure that each monitor receives the following:

       a. A copy of this plan along with any changes made.

       b. Appropriate orientation and guidance.

       c. Specific instructions applicable to the monitors' assigned performance areas.

3. Monitors will evaluate and assess contractor performance and discuss the results with
contractor personnel as appropriate, in accordance with the General Instructions for Performance
Monitors, Attachment IV-B, and the specific instructions and guidance furnished by the PEB
Chair.

4. Monitors will submit ______ (insert monthly, quarterly, etc.) Performance Monitor Reports
and, if required, make verbal presentations to the PEB.

5. The PEB Chair may request and obtain performance information from other units or personnel
normally involved in observing contractor performance, as appropriate.

6. _____ (Insert monthly, quarterly, etc.) the PEB will consider Performance Monitor Reports
and other performance information it obtains and discuss the reports and information with
monitors or other personnel, as appropriate.

7. The PEB will meet ______(insert monthly, quarterly, etc.) with the contractor and discuss
overall performance during the period. As requested by the PEB Chair, monitors and other
personnel involved in performance evaluations will attend the meeting and participate in
discussions.

8. Promptly after the end of each evaluation period, the PEB will meet to consider all the
performance information it has obtained. At the meeting, the PEB will summarize its preliminary
findings and recommendations for coverage in the Performance Evaluation Board Report
(PEBR).

9. Then the PEB may meet with the contractor to discuss the board's preliminary findings and
recommendations. As requested by the PEB Chair, monitors and other personnel involved in
performance evaluation will attend the meeting and participate in discussions. At this meeting,
the contractor is given an opportunity to submit information on its behalf, including an
assessment of its performance during the evaluation period. After meeting with the contractor,
the PEB will consider matters presented by the contractor and finalize its findings and
recommendations for the PEBR.

10. The PEB Chair will prepare the PEBR for the period and submit it to the FDO for use in
determining the award fee earned. The report will include an adjectival rating and a
recommended performance score with supporting documentation. The contractor may be notified
of the PEB evaluation and recommended rating and score. The contractor may provide additional
information for consideration by the FDO. When submitting the report, the Chair will inform the
FDO whether the contractor desires to present any matters to the FDO before the award fee
determination is made.

11. The FDO will consider the PEBR and discuss it with the PEB Chair and other personnel, as
appropriate.

12. The FDO will consider the recommendations of the PEB, information provided by the
contractor, if any, and any other pertinent information in determining the amount of award fee
_____(insert “earned”, or “to be paid” if interim evaluations apply) for the period. The FDO's
determination of the amount of award fee _____ (insert “earned” or “to be paid”) and the basis
for this determination will be stated in the Award Fee Determination Report (AFDR).

13. The contractor will be notified of the FDO's determination by the Contracting Officer. The
contractor may be provided with a debriefing by the FDO and PEB.

14. Contract Termination. If the contract is terminated for the convenience of the Government
after the start of an award-fee evaluation period, the award fee deemed earned for that period
shall be determined by the FDO using the normal award-fee evaluation process. After
termination for convenience, the remaining award-fee amounts allocated to all subsequent
award-fee evaluation periods cannot be earned by the contractor and, therefore, must not be paid.

15. Performance Incentives.(Omit if no performance incentives are included) After delivery of
the hardware unit(s), hardware performance will be measured and its success, or failure,
determined by the Contracting Officer based on the units of measurement and associated dollar
amounts which appear in contract clause H-_____ (insert appropriate clause reference). Either
positive or negative performance incentives will apply depending on whether the hardware unit's
performance exceeds or falls short of the standard performance level.

V. Changes in Plan Coverage

1. Right to Make Unilateral Changes

Any matters covered in this plan not otherwise requiring mutual agreement under the contract,
may be changed unilaterally by the FDO prior to the beginning of an evaluation period by timely
notice to the contractor in writing. The changes will be made without formal modification of the
contract if the plan is not incorporated into the contract.
     2. Steps to Change Plan Coverage

     The following is a summary of the principal actions involved in changing plan coverage (actions
     may be modified to reflect different approval/notification levels). The PEB will establish lists of
     subsidiary actions and schedules as necessary to meet the below schedules.

Action                                                     Schedule (Workdays)
PEB drafts proposed changes                                Ongoing
PEB submits recommended changes to FDO for approval        ___ days prior to end of each period
Through CO, FDO notifies contractor about whether or not   ___days before start of the applicable period
there are changes

     3. Method for Changing Plan Coverage

     The method to be followed for changing the plan coverage is described below:

             a. Personnel involved in the administration of the award fee provisions of the contract are
             encouraged to recommend plan changes with a view toward changing management
             emphasis, motivating higher performance levels or improving the award fee
             determination process. Recommended changes should be sent to the PEB for
             consideration and drafting

             b. Prior to the end of each evaluation period, the PEB will submit its recommended
             changes, if any, applicable to the next evaluation period for approval by the FDO with
             appropriate comments and justification.

             c. ______ (insert number of days) work days before the beginning of each evaluation
             period, the contracting officer will notify the contractor in writing of any changes to be
             applied during the next period. If the contractor is not provided with this notification, or
             if the notification is not provided within the agreed-to number of work days before the
             beginning of the next period, then the existing plan will continue in effect for the next
             evaluation period.



            ATTACHMENT III-A to PEP for Contract No. ___________ with ____________

     Evalution Periods and Maximum Available Award Fee for Each Period

 Period Number                Start Date                   End Date                       Max. Available Award Fee
 1                                                                                        $
 2                                                                                        $
 3                                                                                        $
           ATTACHMENT III-B to PEP for Contract No. ___________ with ____________

    Performance Evaluation Factors and Evaluation Criteria

    The performance factors to be evaluated are identified below. The evaluation criteria for each
    factor are attached, as indicated.

         Area No              Brief Factor Identification         Factor Weight                See Attachment
1                                                                                                  III-B.1*
2
3
4
5


    * A separate attachment should be prepared for each factor.



          ATTACHMENT III-B.1 to PEP for Contract No. ___________ with ____________

    Evaluation Criteria for Performance Evaluation Facotr No. ____

    (Factor Identification Per Attachment III-B)

    Factor Weight _____

    Description of Factor:

    Subfactors to Consider:

    Evaluation Criteria:

    Criteria Weights:

    Basis or Standard for Measuring Performance:



          ATTACHMENT III-C to PEP for Contract No. ___________ with ____________

    Grading Table

    Adjectival Rating Range of           Description
                      Performance Points
    Excellent         (100-91)           Of exceptional merit; exemplary performance in a timely, efficient and
                                         economical manner; very minor (if any) deficiencies with no adverse
                                          effect on overall performance.
Very Good           (90-81)               Very effective performance, fully responsive to contract requirements;
                                          contract requirements accomplished in a timely, efficient and
                                          economical manner for the most part; only minor deficiencies.
Good                (80-71)               Effective performance; fully responsive to contract requirements;
                                          reportable deficiencies, but with little identifiable effect on overall
                                          performance.
Satisfactory        (70-61)               Meets or slightly exceeds minimum acceptable standards; adequate
                                          results; reportable deficiencies with identifiable, but not substantial,
                                          effects on overall performance.
Poor/               (less than 61)        Does not meet minimum acceptable standards in one or more areas;
Unsatisfactory                            remedial action required in one or more areas; deficiencies in one or
                                          more areas which adversely affect overall performance.

Any factor receiving a grade of “poor/unsatisfactory” (less than 61) may be assigned zero
performance points for purposes of calculating the award fee amount. The contractor will not be
paid any award fee when the total award fee score is "Poor/Unsatisfactory" (less than 61).



       ATTACHMENT IV-A to PEP for Contract No. ___________ with ____________

Actions and Schedules for Award Fee Determinations

The following is a summary of the principal actions involved in determining the award fee for
the evaluation periods.

Action                                                                       (Workdays)
1. PEB Chair and members appointed.                                          ____ days prior to first period
2. PEB Chair appoints performance monitors and informs contractor.           ____days prior to first period
3. Monitors receive orientation and guidance.                                ____days prior to first period
4. Monitors assess performance and discuss results with contractor.          Ongoing after start of period
                                                                             Last day of each ___ (insert month,
5. Monitors submit Performance Monitor reports to PEB.
                                                                             quarter, etc.)
6. PEB considers Performance Monitor reports and other requested
                                                                             Ongoing
performance information.
                                                                             ____ days after end of period of each
7. PEB discusses overall performance with contractor during period.
                                                                             ____ (insert month, quarter, etc.)
8. PEB meets and summarizes preliminary findings and position of PEBR.       ____ days after end of period
9. PEB may meet with contractor to discuss preliminary findings and
                                                                             ____ days after end of period
position.
10. PEB establishes findings and recommendations for PEB report.             ____ days after end of period
11. PEB Chair submits PEB report to FDO.                                     ____ days after end of period
12. FDO considers PEB report and discusses with PEB, as appropriate.         ____ days after end of period
13. FDO sends PEB report to contractor.                                      ____ days after end of period
14. Payment made to contractor based on contract modification.               ____ days after end of period

The PEB may establish lists of subsidiary actions and schedules as necessary to meet the above
schedules.
      ATTACHMENT IV-B to PEP for Contract No. ___________ with ____________

General Instructions for Performance Monitors

1. Monitoring and Assessing Performance

       a. Monitors may prepare outlines of their assessment plans, discuss them with appropriate
       contractor personnel to assure complete understanding of the evaluation and assessment
       process.

       b. Monitors may plan and carry out on-site assessment visits, as necessary.

       c. Monitors may conduct all assessments in an open, objective and cooperative spirit so
       that a fair and accurate evaluation is obtained. This will ensure that the contractor
       receives accurate and complete information from which to plan improvements in
       performance. Positive performance accomplishments should be emphasized just as
       readily as negative ones.

       d. The monitor may discuss the assessment with contractor personnel as appropriate,
       noting any observed accomplishments and/or deficiencies. This affords the contractor an
       opportunity to clarify possible misunderstandings regarding areas of poor performance
       and to correct or resolve deficiencies.

       e. Monitors must remember that contacts and visits with contractor personnel are to be
       accomplished within the context of official contractual relationships. Monitors may avoid
       any activity or association which might cause, or give the appearance of, a conflict of
       interest.

       f. Monitor discussions with contractor personnel are not to be used as an attempt to
       instruct, to direct, to supervise or to control these personnel in the performance of the
       contract. The role of the monitor is to monitor, assess and evaluate not to manage the
       contractor's effort.

2. Documenting Evaluation/Assessment

       Evaluations and assessments conducted and discussions with contractor personnel may be
       documented as follows:

3. Evaluation/Assessment Reports

       Monitors may prepare a formal Performance Monitor Report in accordance with the
       following instructions and submit it to the PEB. (Specify format, frequency of submission
       and minimum information requirements)
4. Verbal Reports

       Monitors need to be prepared to make verbal reports of their evaluations and assessments
       as required by the PEB Chair.



                                              END




4 Appendix - Incentive Contracts Guide Added 4/2010

1. Introduction

The purpose of this guide is to further explain incentive contracts, provide examples, and other
considerations for using incentive contracts. This guide:

      Provides general guidance on when an incentive contract may be appropriate;
      Describes elements of the required cost incentive and how the elements influence
       profit/fee earned by a contractor, depending on the cost incurred;
      Describes the general characteristics of a performance incentive and delivery incentive;
      Provides general guidance for structuring multiple (i.e., having a cost incentive and
       performance and/or delivery incentives) incentive contracts;
      Provides general guidance on Fixed-Price Incentive (FPI) contracts including the
       importance of the Point of Total Assumption (PTA);
      Provides general guidance on FPI contracts with a firm target, and FPI with successive
       targets;
      Provides general guidance on Cost-Plus-Incentive-Fee (CPIF) contracts including impact
       of minimum and maximum fee established;
      Provides general guidance on negotiating changes to incentive contracts including
       possible negotiation methods and circumstances in which they would be appropriate.

2. General

(a) Incentive contracts are appropriate when supplies or services can be acquired at lower costs,
and in certain instances with improved delivery or technical performance, by relating the amount
of profit/fee payable under the contract to the contractor's performance. Incentive contracts are
designed to obtain specific program objectives by:
       (1) Establishing reasonable and attainable targets that are clearly communicated to the
       contractor; and

       (2) Including appropriate incentive arrangements designed to motivate contractor efforts
       that might not otherwise be emphasized, and to discourage contractor inefficiency.

(b) When predetermined, formula-type incentives on technical performance or delivery are
included, profit/fee:

       (1) Increases only for achievement that surpasses the targets, and

       (2) Decreases to the extent that such targets are not met.

The incentive increases or decreases are applied to performance targets rather than minimum
performance requirements.

(c) The two basic categories of incentive contracts are fixed-price incentive and cost-plus-
incentive-fee.

(d) Fixed-price incentive contracts are preferred when contract costs and performance
requirements are reasonably certain. It is usually in the Government’s interest for a contractor to
assume substantial cost responsibility and an appropriate share of the cost risk, thus the
preference for fixed price incentive contracts.

(e) Award-fee contracts are a separate type of incentive contract and are discussed separately
under Appendices 2 and 3 of this Section T3.2.4.

3. Cost Incentives

(a) Most incentive contracts include only cost incentives, which take the form of a profit or fee
adjustment formula. Cost incentives are intended to motivate the contractor to effectively
manage costs. An incentive contract cannot provide for other incentives without also providing a
cost incentive (or constraint).

(b) Incentive contracts include a target cost, a target profit or fee, and a profit or fee adjustment
formula that provides (within the constraints of a price ceiling or minimum and maximum fee):

       (1) Actual cost that meets the target will result in the target profit or fee;

       (2) Actual cost that exceeds the target will result in downward adjustment of target profit
       or fee; and

       (3) Actual cost that is below the target will result in upward adjustment of target profit or
       fee.
(c) An example of a cost incentive (in a fixed-price incentive contract) based on the above is as
follows:

       Target Cost $10,000,000
       Target Profit $1,000,000
       Target Price $11,000,000
       Share Ratio 70/30 (Government/contractor)
       Ceiling Price 115% of Target Cost ($11,500,000)

       -Actual cost of $10,000,000 would meet target cost. This results in the contractor earning
       the target profit of $1,000,000 because the contractor met the target cost. $11,000,00
       would be paid to the contractor in total ($10,000,000 target cost + $1,000,000 target
       profit).

       -Actual cost of $11,000,000 would exceed target cost. This results in the contractor
       being responsible for its share of 30% of the amount over the target cost ($1,000,000 X
       30% = $300,000). This amount of $300,000 is deducted from the target profit of
       $1,000,000 for a total of $700,000 profit. Instead of being paid a total of $11,700,000,
       the contractor would be paid $200,000 less because of the ceiling price ($11,500,000) –
       reducing the profit from $700,000 to $500,000.

       -Actual cost of $9,000,000 would be under target cost. This results in the contractor
       earning an additional 30% of the amount below the target cost ($1,000,000 X 30% =
       $300,000) in addition to the target cost for a total of $1,300,000 profit. $10,300,000
       would be paid to the contractor in total.

4. Performance Incentives

(a) Performance incentives may be considered with specific product characteristics (e.g., a
missile range, an aircraft speed, an engine thrust, or a vehicle maneuverability) or other specific
elements of the contractor's performance. These incentives should be designed to relate
profit/fee to a contractor’s achievement, compared with specified targets.

(b) When practicable, positive and negative performance incentives should be considered with
service contracts for performance of objectively measurable tasks when quality of performance is
critical and incentives are likely to motivate the contractor.

(c) Technical performance incentives may be particularly appropriate in major or complex
systems, both in development (when performance objectives are known and the fabrication of
prototypes for test and evaluation is required) and in production (if improved performance is
attainable and highly desirable to the Government).

(d) Technical performance incentives may involve a variety of specific characteristics that
contribute to the overall performance of the end item. Accordingly, the incentives on individual
technical characteristics must be balanced so that no one of them is exaggerated to the detriment
of the overall performance of the end item.
(e) Performance tests and/or assessments of work performance are generally essential in order to
determine the degree of attainment of performance targets. Therefore, the contract must be as
specific as possible in establishing test criteria (such as testing conditions, instrumentation
precision, and data interpretation) and performance standards (such as the quality levels of
services to be provided).

(f) Because performance incentives present complex problems in contract administration, the
Contracting Officer (CO) should negotiate them in full coordination with Government technical
and pricing specialists.

(g) It is essential that the Government and contractor agree explicitly on the effect that contract
changes (e.g., pursuant to the applicable Changes clause) will have on performance incentives.

This will be dealt with in more detail in Section 11 below.

(h) The CO must exercise care, in establishing performance criteria, to recognize that the
contractor should not be rewarded or penalized for attainments of Government-furnished
components.

(i) A basic example of a performance incentive is as follows:

       Maintenance Hours per Operational Hour – Total Possible Incentive $120,000
       Minimum Value – 10 hours – 0% of incentive earned
       Average Value – 5 hours – 50% of incentive earned ($60,000)
       Maximum Value – 2 hours – 100% of incentive earned ($120,000)
       Penalty if > 10 hours -$10,000

       In the example above, if the contractor failed to meet the minimum value of 10 hours per
       operational hour, they would not receive any of the possible $120,000 in incentives.
       Additionally, a negative incentive of $10,000 would be deducted from the negotiated
       value of the contract.

5. Delivery Incentives

(a) Delivery incentives should be considered when improvement from a required delivery
schedule is a significant Government objective. It is important to determine the Government's
primary objectives in a given contract (e.g., earliest possible delivery or earliest quantity
production).

(b) Incentive arrangements on delivery should specify the application of the reward-penalty
structure in the event of Government-caused delays or other delays beyond the control, and
without the fault or negligence, of the contractor or subcontractor.

(c) A basic example of a delivery incentive is as follows:
       The total schedule incentive available must be defined in the contract with specifics as to
       Contract Line Item, Period of Performance etc. as needed. For this example, the total
       incentive amount available is $100,000.

       Delivery Incentive Milestones:

       Positive Incentives

       20% of available incentive for completion of Critical Design Review (CDR) at least two
       (2) weeks ahead of schedule ($20,000)
       20% of available incentive for passing Design Qualification Test (DQT) at least two (2)
       weeks ahead of schedule ($20,000)
       15% of available incentive for passing site acceptance test at least two (2) weeks ahead of
       schedule ($15,000)
       45% of available incentive for achieving Initial Operational Capability (IOC) at least two
       (2) weeks ahead of schedule ($45,000)

       Negative Incentives

       20% of available incentive for not achieving completion of Critical Design Review
       (CDR) on schedule (-$20,000)
       45% for not achieving IOC on schedule (-$45,000)

       The schedule for the milestones as well as what the achievement of each milestone
       involves must be clearly defined in the contract. For example, if the contractor fails to
       meet the first milestone, they lose $20,000 due to the negative incentive. If they do not
       meet the second, there would be no impact as there is no negative incentive. If they meet
       the third at least two weeks ahead of schedule, there would be a positive incentive of
       $15,000 earned. Meeting the last and most important milestone at least two weeks ahead
       of schedule would earn $45,000 for total schedule incentive earnings of $40,00.

6. Structuring Multiple-Incentive Contracts

A properly structured multiple-incentive arrangement should-

(a) Motivate the contractor to strive for outstanding results in all incentive areas; and

(b) Compel trade-off decisions among the incentive areas, consistent with the Government's
overall objectives for the acquisition. Because of the interdependency of the Government's cost,
the technical performance, and the delivery goals, a contract that emphasizes only one of the
goals may jeopardize control over the others. Because outstanding results may not be attainable
for each of the incentive areas, all multiple-incentive contracts must include a cost incentive (or
constraint) that operates to preclude rewarding a contractor for superior technical performance or
delivery results when the cost of those results outweighs their value to the Government.
(c ) While not requiring as much administrative effort as an award fee contract, an incentive
contract with multiple incentives requires some administrative effort to track how the contractor
is performing in relation to the cost incentive and to the performance and/or delivery incentive.
Before entering into a multiple incentive contract, Agencies must determine whether the amount
of additional administrative effort is offset by potentially improved performance by the
Contractor.

(d) A basic example of a multiple incentive contract is as follows (applicable to either Fixed-
Price Incentive or Cost-Plus-Incentive-Fee):

        Target Cost $100
        Target Profit (Fee) $7
        Target Price $107
        Share Ratio 75/25
        Performance Incentive Reward +$3
        Performance Incentive Penalty -$1
        Schedule Incentive Penalty -$1

        -Cost of $84 and maximum performance on schedule – profit is $14 ($16 under Target
        cost X 25% share = $4 + $7 Target Profit +$3 Performance Incentive Reward).

        -Cost of $116 and acceptable performance with late delivery – profit is $2 ($16 over
        Target Cost X 25% share = $4 subtracted from $7 =$3 less $1 Schedule Incentive
        Penalty)

         -Cost of $116 and maximum performance with late delivery – profit is $5 ($16 over
        Target Cost X 25% share = $4 subtracted from $7= $3 less $1 Schedule Incentive Penalty
        plus $3 Performance Incentive Reward)

7. Fixed-Price Incentive (FPI) Contracts

(a) Description. A FPI contract is a fixed-price contract that provides for adjusting profit and
establishing the final contract price by application of a formula based on the relationship of total
final negotiated cost to total target cost. The final price is subject to a price ceiling, negotiated at
the outset.

(b) Application. A FPI contract is appropriate when-

        (1) A FFP contract is not suitable;

        (2) The nature of the supplies or services being acquired and other circumstances of the
        acquisition are such that the contractor's assumption of a degree of cost responsibility will
        provide a positive profit incentive for effective cost control and performance; and
       (3) If the contract also includes incentives on technical performance and/or delivery, the
       performance requirements provide a reasonable opportunity for the incentives to have a
       meaningful impact on the contractor's management of the work.

(c) Billing prices. In FPI contracts, billing prices are established as an interim basis for payment.
These billing prices may be adjusted, within the ceiling limits, upon request of either party to the
contract, when it becomes apparent that final negotiated cost will be substantially different from
the target cost.

(d) Point of Total Assumption. The Point of Total Assumption (PTA ) in FPI contracts is the
point where cost increases that exceed the target cost are no longer shared by the Government
according to the share ratio. At the PTA, the contractor’s profit is reduced one dollar for every
additional dollar of cost. The PTA is calculated as follows:

PTA = (Ceiling Price –Target Price)/Government Share + Target Cost

An example of a PTA calculation is as follows:

       Target Cost $50,000,000
       Target Profit $4,500,000 (9%)
       Target Price $54,500,000
       Ceiling Price 125% of Target Cost = $62,500,000
       Share Ratio 70/30

       PTA = ($62,500,000-54,500,000)/70% + $50,000,000
       PTA = $8,000,000/70% + $50,000,000
       PTA = $11,428,571 + $50,000,000 = $61,428,571

       Thus, cost increases beyond the PTA of $61,428,571 are no longer shared by the
       Government in accordance with the share ratio – the contractor’s profit will be reduced
       one dollar for every additional dollar of cost beyond the PTA.

(e) General Considerations:

        (1) The higher the Government share and the higher the ceiling price, the lower the
overall incentive for the contractor to control costs since they have more ability to recover such
costs; and

        (2) Conversely, the lower the Government share and the lower the ceiling price, the
higher the overall incentive for the contractor to control costs since they have less ability to
recover such costs

8. Fixed-Price Incentive (Firm Target)

(a) Description. A fixed-price incentive (firm target) contract specifies a target cost, a target
profit, a price ceiling (but not a profit ceiling or floor), and a profit adjustment formula. These
elements are all negotiated at the outset. The price ceiling is the maximum that may be paid to
the contractor, except for any adjustment under other contract clauses. When the contractor
completes performance, the parties negotiate the final cost, and the final price is established by
applying the formula. When the final cost is less than the target cost, application of the formula
results in a final profit greater than the target profit; conversely, when final cost is more than
target cost, application of the formula results in a final profit less than the target profit, or even a
net loss. If the final negotiated cost exceeds the price ceiling, the contractor absorbs the
difference as a loss. Because the profit varies inversely with the cost, this contract type provides
a positive, calculable profit incentive for the contractor to control costs.

(b) Applicability: A fixed-price incentive (firm target) contract is appropriate when the parties
can negotiate at the outset a firm target cost, target profit, and profit adjustment formula that will
provide a fair and reasonable incentive and a ceiling that provides for the contractor to assume an
appropriate share of the risk. When the contractor assumes a considerable or major share of the
cost responsibility under the adjustment formula, the target profit should reflect this
responsibility.

(c) Limitations. This contract type may be used only when-

        (1) The contractor's accounting system is adequate for providing data to support
        negotiation of final cost and incentive price revision; and

        (2) Adequate cost or pricing information for establishing reasonable firm targets is
        available at the time of initial contract negotiation.

(d) Contract schedule. The CO should specify in the contract schedule the target cost, target
profit, and target price for each item subject to incentive price revision. Following the
completion of performance, the parties negotiate the final cost, and the final price is established
by applying the formula.

(e) An example of a Fixed-Price Incentive (Firm Target) contract is under Section 7 above.

9. Fixed-Price Incentive (Successive Targets) Contracts

(a) Description.

        (1) A fixed-price incentive (successive targets) contract specifies the following elements,
        all of which are negotiated at the outset:

                (i) An initial target cost.

                (ii) An initial target profit.

                (iii) An initial profit adjustment formula to be used for establishing the firm target
                profit, including a ceiling and floor for the firm target profit. (This formula
               normally provides for a lesser degree of contractor cost responsibility than would
               a formula for establishing final profit and price.)

               (iv) The production point at which the firm target cost and firm target profit will
               be negotiated (usually before delivery or shop completion of the first item).

               (v) A ceiling price that is the maximum that may be paid to the contractor, except
               for any adjustment under other contract clauses providing for equitable
               adjustment or other revision of the contract price under stated circumstances.

       (2) When the production point specified in the contract is reached, the parties negotiate
       the firm target cost, giving consideration to cost experience under the contract and other
       pertinent factors. The firm target profit is established by the formula. At this point, the
       parties have two alternatives, as follows:

               (i) They may negotiate a firm fixed price, using the firm target cost plus the firm
               target profit as a guide.

               (ii) If negotiation of a firm fixed price is inappropriate, they may negotiate a
               formula for establishing the final price using the firm target cost and firm target
               profit. The final cost is then negotiated at completion, and the final profit is
               established by formula, as under the fixed-price incentive (firm target) contract.

(b) Application. A fixed-price incentive (successive targets) contract is appropriate when-

       (1) Available cost or pricing information is not sufficient to permit the negotiation of a
       realistic firm target cost and profit before award;

       (2) Sufficient information is available to permit negotiation of initial targets; and

       (3) There is reasonable assurance that additional reliable information will be available at
       an early point in the contract performance so as to permit negotiation of either (i) a firm
       fixed price or (ii) firm targets and a formula for establishing final profit and price that
       will provide a fair and reasonable incentive. This additional information is not limited to
       experience under the contract, itself, but may be drawn from other contracts for the same
       or similar items.

       An example of a situation where this contract type may be appropriate is where long lead
       time requirements may make it necessary in the acquisition of a new system to contract
       for a follow-on quantity before design or production stability has been achieved.

(c) Limitations. This contract type may be used only when-

       (1) The contractor's accounting system is adequate for providing data for negotiating firm
       targets and a realistic profit adjustment formula, as well as later negotiation of final costs;
       and
       (2) Cost or pricing information adequate for establishing a reasonable firm target cost is
       reasonably expected to be available at an early point in contract performance.

(d) Contract schedule. The CO should specify in the contract schedule the initial target cost,
initial target profit, and initial target price for each item subject to incentive price revision.

(e) Overall considerations for the use of fixed-price incentive (successive targets) are as follows:

       (1) Successive targets are used when uncertainties do not permit the negotiation of a firm
       arrangement;

       (2) The ability to establish a firm pricing arrangement is not limited by the availability of
       cost or pricing data from the contract itself.

       (3) Data may be drawn on as it becomes available from other contracts for the same or
       similar equipment/services; and

Because this type of contract is negotiated when cost and pricing information is not sufficient to
allow negotiation of a firm arrangement, contract performance uncertainties are greater than they
would otherwise be the case in a fixed-price type of contract. A realistic pricing arrangement
would thus not provide as great a degree of contractor cost responsibility as under a FPI contract.

A basic example of a Fixed-Price Incentive (Successive Targets) contract is as follows:


       Initial Target Cost $15,000,000
       Initial Target Profit $1,200,000
       Initial Target Price $16,200,000
       Initial Share Ratio 95/5
       Ceiling on Firm Target Profit $1,350,000
       Floor on Firm Target Profit $1,050,000
       Price Ceiling $19,500,000

       At the production point in the contract, if the cost is $14,500,000, the firm target profit
       would be determined as follows:
       Initial Target Cost $15,000,000
       Negotiated Cost $14,500,000
       Difference $500,000 (decrease)
       Contractor’s Share $25,000 (increase)
       Initial Target Profit $1,200,000
       Firm Target Profit $1,225,000

       At this point, there are two alternatives: Using the negotiated cost of $1,450,000 and the
       firm target profit as guides, a firm-fixed-price may be negotiated. If this is not possible,
       or if the parties agree that uncertainties under the remaining part of the contract make this
       unfeasible, a fixed-price incentive with firm targets may be negotiated. The ceiling price
       cannot be increased at this point but it may be decreased where firm target costs are
       lower than initial target costs. With a revised ceiling price of $16,700,000 and a new
       share ratio of 60/40 negotiated, the following is established:

       Target Cost     $14,500,000
       Target Profit   $1,225,000
       Target Price    $15,725,000
       Ceiling Price    $16,700,000
       Share Ratio     60/40

       The final settlement at contract completion would be done as for the firm target contract
       described in Section 8.

       If the parties negotiated an estimated cost of $17,000,000 at the production point, firm
       target profit would be determined as follows:

       Initial Target Cost $15,000,000
       Negotiated Cost $17,000,000
       Difference $2,000,000 (increase)
       Contractor’s Share $100,000 (decrease)
       Initial Target Profit $1,200,000
       Firm Target Profit $1,100,000

       If a FFP contract was not appropriate, and a sharing formula of 75/25 were
       negotiated, a firm incentive agreement could be set up as follows:

       Target Cost     $17,000,000
       Target Profit   $1,100,000
       Target Price    $18,100,000
       Ceiling Price    $19,500,000
       Share Ratio     75/25

10. Cost-Plus-Incentive-Fee (CPIF) Contracts

(a) Description. The CPIF contract is a cost-reimbursement contract that provides for the initially
negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs
to total target costs. This contract type specifies a target cost, a target fee, minimum and
maximum fees, and a fee adjustment formula. Unlike FPI contracts, there is no ceiling price
under this contract type.

After contract performance, the fee payable to the contractor is determined in accordance with
the formula. The formula provides, within limits, for increases in fee above target fee when total
allowable costs are less than target costs, and decreases in fee below target fee when total
allowable costs exceed target costs. This increase or decrease is intended to provide an incentive
for the contractor to manage the contract effectively. When total allowable cost is greater than or
less than the range of costs within which the fee-adjustment formula operates, the contractor is
paid total allowable costs, plus the minimum or maximum fee.

(b) Application.

       (1) A CPIF contract is appropriate for services or development and test programs when-

               (i) A cost-reimbursement contract is necessary where uncertainties in the work
               under contract make a FPI contract impracticable; and

               (ii) A target cost and a fee adjustment formula can be negotiated that are likely to
               motivate the contractor to manage effectively.

       (2) The contract may include technical performance incentives when it is highly probable
       that the required development of a major system is feasible and the Government has
       established its performance objectives, at least in general terms. This approach also may
       apply to other acquisitions, if the use of both cost and technical performance incentives is
       desirable and administratively practical.

       (3) The fee adjustment formula should provide an incentive that will be effective over the
       full range of reasonably foreseeable variations from target cost. If a high maximum fee is
       negotiated, the contract must also provide for a low minimum fee that may be a zero fee
       or, in rare cases, a negative fee.

(c) Limitations. No CPIF contract shall be awarded unless the contractor has an adequate
accounting system for that type of contract.

(d) Additional considerations for use of this contract type are as follows: Because of the
interrelationship between negotiated fee levels and the sharing arrangement, the wider the range
between minimum and maximum fees, the greater the contractor’s share percentage under the
formula without limiting the range of cost variation over which the incentive is effective.

Examples of a CPIF contract are as follows:

       Target Cost $10,000,000
       Target Fee $750,000
       Maximum Fee $1,350,000
       Minimum Fee $300,000
       Share Ratio 85/15

       (1) Actual cost of $10,000,000 results in the contractor earning the target fee of $750,000
       since the contractor has met the target cost. $10,750,000 would be paid to the contractor
       in total.

       (2) Actual cost of $11,000,000 above the target cost results in the contractor being
       responsible for 15% of the amount over cost ($150,000) which is deducted from the
       target fee for a total of $600,000 fee. This is within the minimum and maximum fee
       limits specified above.

       (3) Actual cost of $9,000,000 below the target cost results in the contractor earning an
       additional $150,000 in fee above the target fee ($900,000). This is within the minimum
       and maximum fee limits specified above.

11. Impact of Contract Changes

When work required under a contract is changed under the “Changes” clause or other appropriate
clause of an incentive contract – either increased or decreased – adjustments may be negotiated
to the target cost, target fee, share ratio, etc. as appropriate. Performance and/or schedule
incentives may also be similarly renegotiated. Since late definitizations of contract changes can
adversely affect the integrity of the incentive contract structure, agreements on the pricing and
incentive aspects of contract changes should be negotiated as soon as possible.

Four possible methods of making equitable adjustments to incentive contracts are as follows:

(a) Constant dollar – where the same dollar adjustment is applied to target, maximum and
minimum fee or profit and ceiling price;

(b) Constant percentage – where the percentage of minimum and maximum fee or the percentage
of ceiling price over target cost is held constant. The constant dollar and constant percentage
methods are similar except for differences in fee/profit earned at the extremes of ranges above or
below the target cost;

(c) Individual element – determining the effect of the change on each element such as target cost,
target fee, and ceiling price individually. This is appropriate where the degree of uncertainty
varies significantly between the original contract and the changed portion. There is a flexibility
to tailor the specifics of the incentive to the change; however, the disadvantage is that more
administrative effort is often needed to evaluate and negotiate each individual element; and

(d) Severable change – where the change is isolated form the incentive provisions with a separate
agreement reached on the change portion. This method is most appropriate where the changed
portion is completely different in terms of technical and cost risk than the original contract. For
instance, the contract may be CPIF while the new work may be FPI.

Overall, the method chosen depends on the extent and nature of the change as well as its impact
upon the individual incentive contract elements.
T3.2.5 - Contractor Ethical Guidelines Revised 4/2008


A Contractor Ethical Guidelines

1 Officials Not to Benefit

FAA contracts are to state that no member of or delegate to Congress, or resident commissioner,
will be admitted to any share or part of the contract or any benefit arising from it. If a contract is
made between the FAA and any member of or delegate to Congress, or resident commissioner, it
may constitute a violation of 18 U.S.C. 431 and 432, resulting in:

a. Both the employee of the FAA who awarded the contract and the member, delegate, or
resident commissioner being subject to criminal penalties;

b. The contract being void; and

c. The contractor having to return any consideration paid by the FAA under the contract.


2 Contractor's Gratuities to FAA Personnel Revised 4/2008

a. With certain limited exceptions, employees are prohibited from accepting gratuities or gifts
from contractors or persons seeking FAA contracts or other business under rules prescribed in 5
CFR 2635.201-2635.205. This applies to all contracts except those for personal services.

b. Information or allegations concerning unlawful gratuities or gifts should be promptly referred
to the Inspector General. If the Inspector General finds evidence that an offeror or contractor
offered or gave an unlawful gratuity or gift, the Contracting Officer (CO) must determine
whether debarment proceedings are appropriate in addition to actions taken under a specific
contract

c. Before taking any action against a contractor, the CO should determine, after notice and
hearing by the FAA Office of Dispute Resolution for Acquisition, whether the contractor, its
agent, or another representative, under a contract containing the "Gratuities or Gifts" clause:

       (1) Offered or gave a gratuity (e.g., an entertainment or gift) to an officer, official, or
       employee of the FAA; and intended by the gratuity to obtain a contract or favorable
       treatment under a contract (intent generally must be inferred).

       (2) The contractor will have an opportunity to appear with counsel, submit documentary
       evidence, present witnesses, and confront any person the agency presents.

       (3) When the CO determines that a violation has occurred, FAA may terminate the
       contractor's right to proceed and initiate debarment or suspension measures.
3 Contingent Fees Revised 4/2008

a. A contractor may not pay a fee to an agent contingent upon the agent's soliciting or obtaining
award of a contract. Such a fee arrangement is improper because it may lead to attempted or
actual exercise of improper influence. The prohibition does not apply to contingent fee
arrangements between contractors and bona fide employees or bona fide agencies employed by
contractors to secure business. Contractors should warrant that they have not engaged in
contingent fee arrangements, other than those with full-time bona fide employees working solely
for the prospective contractor, when they sign the contract.

b. For breach or violation of the warranty by the contractor, FAA may annul the contract without
liability or deduct from the contract price or consideration, or otherwise recover, the full amount
of the contingent fee.

        (1) FAA employees who suspect or have evidence of attempted or actual exercise of
        improper influence, misrepresentation of a contingent fee arrangement, or other violation
        of the contingent fee clause should report the matter promptly to the Contracting Officer
        (CO) or the Inspector General.

        (2) When there is specific evidence or other reasonable basis to suspect one or more of
        the violations in paragraph (1) above, the CO should review the facts and, if appropriate,
        take or direct one or more of the following, or other, actions:

                (a) If before award, reject the offer;

                (b) If after award, enforce FAA's right to annul the contract or to recover the fee;

                (c) Initiate suspension or debarment action;

                (d) Refer suspected fraudulent or criminal matters to the Department of Justice.


4 Limitation on the Payment of Funds to Influence Federal Transactions Revised 4/2008

a. A recipient of a Federal contract, grant, loan, or cooperative agreement is prohibited by 31
U.S.C. 1351 from using appropriated funds to pay any person for influencing or attempting to
influence an officer or employee of any agency, member of Congress, officer or employee of
Congress, or employee of a member of Congress in connection with award of any Federal
contract, grant, loan, cooperating agreement, or modification to any of the aforementioned.

b. By signing its offer, an offeror certifies that no appropriated funds have been paid or will be
paid in violation of 31 U.S.C. 1352.
c. Suspected violations of will be referred to the Contracting Officer. The FAA may impose and
collect civil penalties pursuant to the provisions of the Program Fraud and Civil Remedies Act,
31 U.S.C. 3803 (except subsection (c)), 3804-3408, and 3812.


5 Subcontractor Kickbacks

As prescribed by the Anti-Kickback Act (41 U.S.C. 51-58), subcontractors are prohibited from
making payments (or anything of value) and contractors from accepting payments (or anything
of value) for the purpose of improperly obtaining or rewarding favorable treatment in connection
with a prime contract or a subcontract relating to a prime contract.


6 Unreasonable Restrictions on Subcontractor Sales Revised 4/2008

Subcontractors are not to be unreasonably precluded from making direct sales to FAA of any
supplies or services made or furnished under a contract. However, this does not preclude
contractors from asserting rights that are otherwise authorized by law or regulation.


7 Contracts with Federal Employees/Business Owned by Federal Employees

a. Contracts with Current Federal Employees. The FAA will not knowingly award a contract to
a Federal employee or to a business concern or other organization owned or substantially owned
or controlled by one or more Federal employees.

b. Contracts with Former Federal Employees. The FAA may enter into contracts with a former
Federal employee, or business concern or other organization owned or substantially owned or
controlled by one or more former Federal employees.

c. Contracts with Former Federal Employees Taking the Retirement Buy-out. The FAA may
enter into contracts with former Federal employees who have taken the buy-out retirement option
only if those individuals have complied with federal, agency, and local laws or policies
concerning reemployment as a contractor. The Contracting Officer should consult with the
cognizant legal counsel about retirement buy-out restrictions and potential contracts with former
Federal employees.


8 Voiding and Rescinding Contracts Revised 4/2008

a. The FAA has discretionary authority to void and rescind contracts, in addition to any other
rights available under law or regulation, when a contractor has a final conviction for bribery,
conflict of interest, misconduct, or any other violation of 18 U.S.C. 201-224 involving or relating
to FAA contracts. The FAA may also recover the amounts expended and property transferred
under the contracts.
b. Because a final conviction under 18 U.S.C. 201-224 relating to a contract also may justify the
conclusion that the party involved is not presently responsible, the Contracting Officer (CO)
should consider initiating debarment proceedings, if debarment has not been initiated, or is not in
effect at the time the final conviction is entered.

c. The facts concerning any final conviction for any violation of 18 U.S.C. 201-224 involving or
relating to FAA contracts should be reported promptly to the CO. The CO should also promptly
notify the Civil Division, Department of Justice, that action is being considered.

d. When proposing to declare void and to rescind a contract, the CO will provide to the
contractor, as a minimum, the following:

       (1) A written notice of proposed action to declare void and rescind the contract sent by
       certified mail, return receipt requested. The notice should:

               (a) Advise that consideration is being given to declaring void and rescinding
               contracts awarded by FAA, and recovering the amounts expended and property
               transferred, under the provisions of 18 U.S.C 218;

               (b) Specifically identify the contracts affected by the action;

               (c) Specifically identify the final conviction on which the action is based;

               (d) State the amounts expended and property transferred under each of the
               contracts involved, and the money and the property demanded to be returned;

               (e) Identify any tangible benefits received and retained by the FAA under the
               contract, and the value of those benefits, as calculated by the FAA;

               (f) Advise that pertinent information may be submitted within 30 calendar days
               after receipt of the notice, and that, if requested within that time, a hearing will be
               held at which witnesses may be presented and any witness the FAA presents may
               be confronted. Also, advise that no inquiry will be made regarding the validity of
               the conviction.

               (g) Advise that action will be taken only after the CO issues a final written
               decision on the proposed action.

       (2) The final decision to void and rescind a contract will be based on the information
       available to the Contracting Officer, including any pertinent information submitted or, if
       a hearing was held, presented at the hearing. If the Contracting Officer declares void and
       rescinds the contract, the final decision will:

               (a) State that determination;
               (b) Reflect consideration of the fair value of any tangible benefits received and
               retained by the FAA;

               (c) State the amount due and the property to be returned to the FAA; and

               (d) Be sent promptly by certified mail, return receipt requested.


9 Whistleblower Protection for Contractor Employees Revised 10/2010

a. FAA contractors should not discharge, demote or otherwise discriminate against an employee
as a reprisal for disclosing information to a Member of Congress, or an authorized official of an
agency or of the Department of Justice, relating to a substantial violation of law related to a
contract (including the competition for or negotiation of a contract).

b. Any employee of a contractor who believes that he or she has been discharged, demoted, or
otherwise discriminated against may file a complaint with the Inspector General. Upon
completion of the investigation, the Contracting Officer (CO) will ensure that the Inspector
General's report of findings is provided to:

       (1) The complainant and any person acting on the complainant's behalf;

       (2) The contractor alleged to have committed the violation; and

       (3) The Director of Acquisition and Contracting.

c. The complainant and the contractor will be afforded the opportunity to submit a written
response to the report of findings within 30 days to the contracting officer. Extensions of time to
file a written response may be granted by the contracting officer. At any time, the CO may
request additional investigative work be done on the complaint.

d. If the CO determines that a contractor has subjected one of its employees to a reprisal for
providing information to a Member of Congress, or an authorized official of an agency or of the
Department of Justice, the CO may take one or more of the following actions:

       (1) Order the contractor to take affirmative action to abate the reprisal;

       (2) Order the contractor to reinstate the person to the position that the person held before
       the reprisal, together with the compensation (including back pay), employment benefits,
       and other terms and conditions of employment that would apply to the person in that
       position if the reprisal had not been taken; or

       (3) Order the contractor to pay the complainant an amount equal to he aggregate amount
       of all costs and expenses (including attorneys' fees and expert witnesses' fees) that were
       reasonably incurred by the complainant for, or in connection with, bringing the complaint
       regarding the reprisal.
e. Whenever a contractor fails to comply with an order, the CO should request the Department of
Justice to file an action for enforcement of such order in the United States district court for a
district in which the reprisal was found to have occurred. In any action brought under this
section, the court may grant appropriate relief, including injunctive relief and compensatory and
exemplary damages.

f. Any person adversely affected or aggrieved by an order issued under this section may obtain
review of the order's conformance with the law in the United States Court of Appeals for a
circuit in which the reprisal is alleged in the order to have occurred. No petition seeking such
review may be filed more than 60 days after issuance of the order by the CO. Review is to
conform to 5 U.S.C. 7.


10 Contractor Code of Business Ethics and Conduct Added 4/2008

FAA contractors must conduct themselves with the highest degree of integrity and
honesty. Contractors should have a written code of business ethics and conduct. To promote
compliance with such code of business ethics and conduct, contractors should have an employee
business ethics and compliance training program and an internal control system that:

         a. Are suitable to the size of the company and to the extent of its involvement in
         Government contracting;

         b. Facilitate timely discovery and disclosure of improper conduct in connection with
         FAA contracts; and

         c. Ensure corrective measures are promptly instituted and carried out.


11 Definitions Revised 4/2008

a. "Bona fide agency," means an established commercial or selling agency, maintained by a
contractor for the purpose of securing business, that neither exerts nor proposes to exert improper
influence to solicit or obtain FAA contracts nor holds itself out as being able to obtain any FAA
contract or contracts through improper influence.

b. "Bona fide employee," means a person, employed by a contractor and subject to the
contractor's supervision and control as to time, place, and manner of performance, who neither
exerts nor proposes to exert improper influence to solicit or obtain FAA contracts nor holds out
as being able to obtain any FAA contract or contracts through improper influence.

c. "Contingent fee," means any commission, percentage, brokerage, or other fee that is
contingent upon the success that a person or concern has in securing a FAA contract.
d. "Improper influence," means any influence that induces or tends to induce an employee to
give consideration or to act regarding an FAA contract on any basis other than the merits of the
matter.

e. "Authorized official of the agency" means an employee responsible for contracting, program
management, audit, inspection, investigation, or enforcement of any law or regulation relating to
FAA procurement or the subject matter of the contract.

f. "Authorized official of the Department of Justice" means any person responsible for the
investigation, enforcement, or prosecution of any law or regulation.

g. "Final conviction" means a conviction, whether entered on a verdict or plea, including a plea
of nolo contendere, for which a sentence has been imposed.


B Clauses

view contract clauses


C Forms

view procurement forms
T3.2.6 - Purchase Card Program Added 1/2009


A Purchase Card Program Added 1/2009

1 Purchase Card Revised 7/2011

a. Overview. The FAA purchase card (i.e. SmartPay Card) is an internationally accepted credit
card. The purchase card is issued through General Services Administration (GSA) contract with
a credit card bank, e.g., U.S. Bank. FAA employees who receive training and a Delegation of
Purchasing Authority (DPA) from the Chief of the Contracting Office (COCO) are authorized to
use the card, within the specified dollar limits, to acquire products and services.

b. Duties.

        (1) Approving Official (AO): A Government employee responsible for the following
        activities:

                (a) Establish and continually monitor internal controls to ensure that the prior
                approval of purchases and funds certification are obtained by cardholders and key
                duties of the program are properly segregated.

                (b) Notify the APC when a cardholder retires, leaves FAA, transfers to another
                office, or no longer requires a purchase card.

                (c) Establish procedures to ensure that cardholder purchase card files are retained
                when a cardholder retires, transfers to another office, or leaves FAA.

                (d) Submit the application for a new purchase cardholder to the APC for
                establishing a new cardholder's account.

                (e) Submit a written request to the APC to change the cardholder's single and/or
                monthly purchase limit.

                (f) Report fraudulent or improper use of the purchase card to the National
                Purchase Card Program Manager and APC.

                (g) Review and final approve cardholder's transactions in US Bank Access Online
                within 45 days of the close of the billing cycle. All transactions must be final
                approved (including fraud and disputed transactions) to ensure funds are
                expended from the correct appropriation code.

                (h) Safeguard the bank's user IDs and passwords. The AO must not share user
                IDs and passwords.
      (i) Ensure that items purchased through the purchase card are the same as those
      approved. The cardholder is to provide to the AO a justification for any
      differences.

(2) Cardholder: A Government employee who uses the purchase card to make purchases
and is responsible for the following activities:

      (a) Safeguard the purchase card and account number. Only the individual whose
      name appears on the card is authorized to use it. Allowing someone other than
      the cardholder to use the card, or sharing passwords to obtain products and
      services, is considered an unauthorized purchase that is subject to disciplinary
      action as outlined in the Human Resources Operating Instructions (HROI) Table
      of Penalties, ER-4.1, Section 27h.

      (b) Obtain prior approval from the approving official before making a purchase.
      The approving official is required to approve the justification of each individual
      transaction for need and accuracy. The cardholder must obtain documented
      confirmation of any verbal approval within 10 days of receiving the verbal
      approval.

      (c) Ensure the accounting classification code (ensuring correct object class codes)
      for each item to be procured has been certified by a budget official before the
      purchase is made. Each cardholder has a primary use or "default" accounting
      classification code based on the primary use of the card.

      (d) Provide copies of source documents (i.e., invoice, purchase order, etc.)
      relating to purchases of accountable personal property to appropriate personnel.

      (e) Abide by, and never exceed, their single and monthly purchase limits.
      Purchases must not be “split” to circumvent single purchase limits.

      (f) Review and validate all charges against their sales slips, review any credits on
      the statement, and dispute charges for purchases not received.

      (g) Review and approve transactions in US Bank Access Online within 45 days of
      the close of the billing cycle. All transactions must be final approved (including
      fraud and disputed transactions) to ensure funds are expended from the correct
      appropriation code.

      (h) Notify the APC or alternate APC as part of the exit clearance process when
      retiring or leaving FAA, and properly destroy issued cards and convenience
      checks.

      (i) Maintain documentation for each purchase card transaction for 6 years, 3
      months.
c. Single Purchase Limit. The maximum Single Purchase Limit that may be delegated to an un-
warranted cardholder is $10,000 (this limit applies to new delegations issued after January 12,
2009; all delegations issued before this date are unchanged and "grandfathered" at the limit
established by the Chief of the Contracting Office in a Delegation of Purchasing Authority).
Cardholders must not exceed their single and monthly purchase limits. Purchases must not be
“split” in order to circumvent these single purchase limits.

        (1) The Chief of the Contracting Office (COCO) may grant higher limits, either
        permanently or temporarily, if presented with a written justification establishing an
        unusual or compelling need.

        (2) Prior to being delegated permanent single purchase limits exceeding $10,000,
        cardholders must complete additional training requirements (detailed below)
        commensurate with the additional authority.

        (3) Permanent single purchase card limits over $25,000 require the approval of the FAA
        Acquisition Executive (FAE).

d. Initial Training.

        (1) Cardholder.

                (a) All cardholders must complete the following before a purchase card will be
                issued:

                       (i) GSA SmartPay 2 Purchase Card Training- online: A copy of the
                       training certificate is provided to the APC
                       (https://training.smartpay.gsa.gov/training/purchase-card-cardholders);

                       (ii) US Bank Access Online Web-Based Training for cardholders- online:
                       (https://wbt.access.usbank.com/);

                       (iii) Review of the purchase card program requirements in AMS
                       Procurement Guidance T3.2.6; and

                       iv) Using the Purchase Card in FAA- classroom: Must be completed
                       within 9 months of the application date for a cardholder’s first account.

                (b) In addition to the training requirements above, cardholders must complete the
                following before a purchase card will be issued with a permanent single purchase
                limit over $10,000:

                       (i) CON 100- Shaping Smart Business Arrangements

                       (ii) CON 237- Simplified Acquisition Procedures
                      (iii) CLC 004- Market Research

       (2) Approving Official.

               (a) An approving official (AO) must complete the following before authority and
               access are granted:

                      (i) GSA SmartPay 2 Purchase Card Training- online: A copy of the
                      training certificate is provided to the APC
                      (https://training.smartpay.gsa.gov/training/purchase-card-cardholders);

                      (ii) U. S. Bank Access Online Web-Based Training for AOs- online:
                      (https://wbt.access.usbank.com/); and

                      (iii) Review of the purchase card program requirements in AMS
                      Procurement Guidance T3.2.6.

               (b) It is highly recommended that AOs attend the class Managing and Approving
               Financial Transactions and/or Using the Purchase Card in FAA within 9 months
               of designation.

e. Refresher Training. Refresher training will be completed by each AO and cardholder using the
eLMS course Purchase Card Program (FAA60004975) every two years.

f. Separation of Duties. Key duties and responsibilities in authorizing, processing/recording,
certifying availability of funds, and reviewing official agency transactions should be separated
among individuals. The following conditions apply in the processing of a purchase card
transaction:

       (1) The AO is the last person to approve the individual purchase after the cardholder
       obtains certification of funds

       (2) The AO must approve the justification of each individual transaction for need and
       accuracy;

       (3) An individual must never perform all duties;

       (4) An AO and fund certifier must not perform both approval and fund certification for
       the same purchase; and

       (5) The cardholder must never be the AO and/or fund certifier.

g. Mandatory Sources and Other Requirements. When using the purchase card, cardholders must
consider the following requirements:

       (1) Strategic Sourcing Initiatives. This includes the following:
               (a) Strategic Sourcing for the Acquisition of Various Equipment and Supplies
               (SAVES). The SAVES program is a mandatory source for some equipment and
               office supplies (see AMS Procurement Guidance T3.8.6).

               (b) Enterprise software licensing agreements such as Oracle.

       (2) Federal Prison Industries, Inc. (FPI) (also known as UNICOR). For those products
       available through FPI, the procedures detailed in AMS Procurement Guidance T3.8.4,
       Government Sources of Products/Services, must be strictly followed.

       (3) Randolph-Sheppard Act. The FAA must first consider the blind in the operation of
       vending facilities. (See AMS Procurement Guidance T3.8.4)

       (4) Javits-Wagner-O'Day Act (JWOD). The FAA must first consider items and services
       available through the AbilityOne Program (formerly JWOD) before going to other
       sources. (See AMS Procurement Guidance T3.8.4)

       (5) General Services Administration (GSA) Federal Supply Schedules (FSS). When
       procuring items through a GSA FSS, FAA must follow the procedures detailed under
       AMS Procurement Guidance T3.8.3, Federal Supply Schedules. Note that GSA is not a
       mandatory source for FAA.

       (6) Section 508 Requirements. The FAA must procure products and services that comply
       with Federal requirements for Section 508 of the Rehabilitation Act. (See AMS
       Procurement Guidance T3.2.2)

       (7) Environmental Requirements. The FAA should acquire environmentally preferable,
       energy and water efficient, and recycled content products and services when possible.
       (See AMS Procurement Guidance T3.6.3 for additional information)

h. Split Purchase. A split purchase is a procurement made to avoid established purchase limits, to
include single purchase limits and competition thresholds.

Split purchases may also include procurement intended to avoid limits governing the use of the
purchase card for construction ($2,000) or services ($2,500). It is not necessary for the purchase
to be in the same day or made by the same cardholder to qualify as a split purchase. One-time
increases can be authorized by the Chief of the Contracting Office (COCO).

i. Use of the Purchase Card as a Payment Vehicle.

       (1) The purchase card may be used as a payment tool against an existing signed contract,
       lease, or order. This allows users to utilize the purchase card’s streamlined payment
       characteristics when its use alone may be otherwise restricted.

       (2) When the purchase card is being used as a payment vehicle against a contract, lease or
       order, all terms and conditions must be established in writing and be signed by both a
       warranted CO and the vendor. The contract, lease or order must specifically authorize
       the use of the purchase card as a payment tool.

       (3) Payments must not exceed the cardholder’s Single Purchase Limit.

       (4) Each payment made using the purchase card against an existing signed contract, lease,
       or order must include:

              (a) Information regarding the source contract, lease, or order, to include the
              contract/lease/order number, CO, award date, period of performance or delivery
              date, and proof of funds availability;

              (b) A copy of the terms and conditions in the contract, lease, or order authorizing
              the use of the card;

              (c) A copy of the invoice or request for payment;

              (d) Proof of delivery;

              (e) Evidence that the CO authorizes payment; and

              (f) Prior approval by the Approving Official (AO) authorizing the use of the card.

j. Services Procured Using a Purchase Card.

       (1) The purchase card may be used to procure services under the following guidelines:

              (a) The services are exempted from the Service Contract Act (SCA), as detailed
              under AMS Procurement Guidance T3.6.2, and do not exceed the cardholder’s
              Single Purchase Limit. Services exceeding $2,500 in which SCA is applicable
              must not be purchased using the purchase card.

              (b) Recurring Services.

                     (i) The service requirement does not exceed one (1) year, and the total
                     value for the year does not exceed the cardholder’s Single Purchase Limit.

                     (ii) If the SCA applies to the service requirement, the total value of the
                     service must not exceed $2,500 for the year.

                     (iii) For any recurring service, the total dollar value of the service must be
                     established at the time of the initial order, despite payment being made
                     monthly.

                     (iv) The certification of funds availability must be sufficient to cover the
                     entire term of the service, but cannot exceed one year.
       (2) Purchase cards must not be used to enter into agreements containing terms and
       conditions that include termination costs or option periods, or which may incur any
       contingent liabilities (liabilities that are based on whether or not a future event occurs).

       (3) Purchase cards must not be used to procure personal services. Personal service
       procurements create an employer-employee relationship between FAA and the
       contractor’s personnel (see AMS Procurement Guidance T3.8.2).

       (4) The purchase card must not be used to enter into equipment or other types of leases,
       unless the procurement is through a FAA contract and/or strategic sourcing initiative (e.g.
       SAVES).

       (5) Maintenance agreements are not considered leases, and may be procured using the
       purchase card.

       (6) The purchase card may be used as a payment vehicle against existing service
       contracts or agreements signed by a CO.

k. Construction Procured Using a Purchase Card.

       (1) "Construction" means construction, alteration, or repair of buildings, structures, or
       other real property. For purposes of this definition, the terms "buildings, structures, or
       other real property" include but are not limited to improvements of all types, such as
       maintenance facilities, duct banks, air traffic control facilities, communication towers,
       radar facilities, office facilities, airport facilities, and navigational aids.

       (2) The purchase card may be used to procure construction totaling $2,000 or less, as
       long as it does not exceed the cardholder’s Single Purchase Limit.

       (3) The value of a construction project includes all related work, and may involve
       multiple purchases (i.e. multiple purchases towards the completion of a single
       construction project are included in the total value of the work). If the total value of the
       project is over $2,000, the purchase card must not be used.

       (4) The purchase card may be used as a payment vehicle against an existing construction
       contract signed by a CO.

l. Competition.

       (1) $3,000 or less. Competition is not required for purchases of $3,000 or less.

       (2) In excess of $3,000 and not in excess of $10,000. Competition is encouraged, but not
       mandatory for purchases in excess of $3,000 and not in excess of $10,000. Purchasers
       should consider the administrative cost of making the purchase versus potential savings
       that could result from competition. Purchases in excess of $3,000 and not in excess of
       $10,000 on a single source basis do not require a signed justification for the single source
       decision. However, purchasers should use sound business judgment and must document
       their rationale for not seeking quotes or pricing from two or more sources.

       (3) In excess of $10,000. For approved actions that value in excess of $10,000, applicable
       AMS requirements for competition or single source procurement apply.

m. Rational Basis. Purchasers should have a rational basis for purchasing decisions. The extent
of documentation substantiating purchase decisions depends on the value and circumstances of
the purchase. As the value of a purchase increases, the documentation supporting the purchase
should increase as well. If the purchase involves an item that is a viable exemption to an
applicable prohibition or restriction (See AMS Procurement Guidance T3.2.2.5.A:4,
Considerations for Restricted Purchases), then the purchaser must, despite the dollar value of the
purchase, document the basis and background for the purchase. The cardholder should also
document the background for actions that would appear questionable to a reasonable and prudent
person with market knowledge of the products or services being purchased.

n. US Bank Access Comments Fields. Cardholders must enter required data into US Bank Access
comments fields.

       (1) Comments Field 1: PCPS Number, Financial Tracking/Cuff Record System Number
       (e.g. REGIS Number), Accountable property information (e.g. AITS Number), other
       explanatory information (e.g. fraudulent transaction, emergency purchase, disputed item
       information, etc.).

       (2) Comments Field 2: Description of the item or service.

       (3) Comments Field 3 (Recovery Act): Description of purchases made using funds
       received from the American Recovery and Reinvestment Act.

       (4) Comments Fields 4 (Identifier for Item Below) and 5 (Item of National Interest):
       Description of purchases made during declared emergencies (e.g. supplies purchased
       during hurricanes or other disasters).

o. Documentation.

       (1) Documentation supporting purchase card transactions must be retained for 6 years, 3
       months from the transaction date.

       (2) All cardholder purchase card transactions must be supported by the following:

               (a) Certification of prior approval. The cardholder will obtain confirmation of any
               verbal approval within 10 days of receiving the verbal approval.

               (b) Certification of funds availability. Funds certification officers must provide a
               documented certification of funds availability prior to any purchase. This can be
               done on a quarterly, semi-annual or annual basis.
       (c) A sales slip, invoice, or order confirmation.

       (d) Rational basis.

       (e) Receipt of goods or services.

              (i) Where the cardholder is also the receiver, another FAA employee
              (except for the AO) must confirm receipt of the goods or services by
              signing the sales slip or invoice.

              (ii) Except for items considered sensitive or pilferable, confirmation of
              receipt of goods or services is not required where the unit price is less than
              $5,000 or the item is being incorporated into a project for a fixed asset
              (e.g., buildings and other structures).

              (iii) Items that are considered sensitive or pilferable include, but are not
              limited to:

 Weapons                             Computer hard drives
 Firearm periphery equipment such as External disc drives
 scopes
 Ammunition                          Personal Data Assistants (PDA)
 Cell phones                         Secure fax machines
 Pagers                              Recording equipment
 Encrypted phones                    Cameras, non-disposable
 Two-way radios.                     Test equipment
 Laptop computers                    Laboratory and medical equipment
       (f) Check for exceptions to prohibited purchases (see AMS Procurement
       Guidance T3.2.2.5.A.2 and this section).
       (g) Additional supporting documentation needed for special transactions such as
       training, convenience checks, etc.

(3) Accountable Property. Cardholder purchase card transaction source documentation
must be routed as follows:

       (a) Cardholder must provide a suspense copy of the purchase card order
       (documented proof of prior approval) for accountable personal property to the
       Property Delegate (Property Custodian) in the gaining organization after placing
       the order.

       (b) After receiving the property, the person receiving the items must provide
       documentation (invoices, sales slips, packing slips and/or receiving reports) for
       the purchase to the Property Delegate for entry into official agency inventory
       system and to clear the suspense copy of the purchase card order;
              (c) More detail relating to Property Custodian/Delegates roles are located on the
              FAA Intranet (FAA only) under the title FAA Personal Property Process and
              Procedure Guide, V2, June 1, 2009.

p. Prohibited Purchases.

       (1) Long-term rental or lease of land or buildings. Exception: The purchase card may be
       used to purchase short-term commercial conference and meeting-room space. (See AMS
       Procurement Guidance 3.2.2.5A:3 for additional information)

       (2) Cash advances, including money orders;

       (3) Telephone services provided through GSA or the local Office of Information Services
       or Service Center Communications Office. However, telephone equipment may be
       purchased using the card;

       (4) Real property, which is defined as land, buildings, structures or rights over or under
       the land such as improvements to make it more productive or to make it serve a more
       beneficial end than the land itself;

       (5) Long term storage unit rental or services (long term is defined as 6 months or more),
       unless the purchase card is being used solely as a payment vehicle against a contract or
       lease signed by the CO/RECO and;

              (a) The total cost of the rental or purchase of the storage services does not exceed
              the cardholder’s delegated authority;

              (b) The portable units are not classified as real property (defined above); and;

              (c) The terms and conditions of the rental or storage services (e.g., termination
              authority) are in writing and signed by both parties.

       (6) Use of the purchase card for personal purchases or as identification when writing
       personal checks is prohibited.

       (7) Use of the purchase card for travel charge card or travel-related expenses is
       prohibited. Exception: Metro fare cards and toll passes (e.g. EZ Pass) may be purchased
       for local travel supporting official FAA business. Proper controls must be established to
       ensure that fare cards or passes are not lost or stolen, and use is recorded and monitored
       to prevent the cards from being used for commuting to and from work. For other services
       related to local travel, each must be approved by the COCO prior to purchase.

       (8) Use of the purchase card to obtain commercial, Government owned or leased vehicles
       is prohibited.
       (9) Store gift cards or gift certificates must not be purchased with the Government
       Purchase card.

q. Restricted Purchases. Restrictions for all simplified purchases can be found in AMS
Procurement Guidance T3.2.2.5A:4.

r. Purchase Card Use for Non-Monetary Awards. Refer to AMS Procurement Guidance
T3.2.2.5A:2 for additional information.

s. Third Party On-line Payments. Cardholders are required to immediately provide the
Approving Official written notification (i.e. e-mail or memorandum) when they become aware
that a purchase card purchase will be processed by a third party on-line payment company. Also
cardholders must provide the approving official a copy of all documentation that supports the on-
line payment transaction within five days of item receipt.

t. Acquisition of Training Services. The FAA purchase card is encouraged for use to the
maximum extent possible to acquire training. If not designated a training coordinator, it is
important for the cardholder to ensure that proper coordination of training requirements has
taken place prior to training being purchased, e.g. completed training checklist, needs
assessment, etc.

u. Tax Exemption. At the time of the purchase, cardholders should advise the merchant that the
purchase is for official U.S. Government purposes and therefore is not subject to state or local
tax. If the vendor wants to clarify this, the back of the card includes an 888 number that may be
called for verification. Exceptions do exist for certain state taxes in certain states (i.e., New
Mexico or Arizona). For this reason, cardholders should contact legal counsel regarding
applicability of any exemptions or other issues related to state or local taxes.

       (1) A review should be made of the bank statement for inclusion of sales tax. If sales tax
       was included, first check for the state exception. If sales tax is charged in error, request a
       credit from the vendor.

       (2) All newly issued purchase cards should be checked to ensure that the Operating
       Administration’s name and the tax ID are embossed on the card.

v. Deficiencies/Disputes/Damaged Equipment

       (1) If the cardholder finds a discrepancy that is the result of item shortage, receipt of a
       defective or damaged item, or receipt of the wrong item, the first step is to contact the
       vendor to seek resolution. The cardholder should request a replacement item or a credit
       from the vendor. If the vendor agrees to credit a cardholder’s account, the credit will
       appear on the cardholder’s electronic account statement the following month. On the
       statement, the cardholder will need to final approve both actions, also. If the item is
       rejected by the Government, the cardholder should return the defective, damaged or
       erroneous item to the vendor within 60 days of receipt.
               (a) If a refund is issued in the form of store credit, it must be made out to the
               Federal Aviation Administration and used for a future valid purchase.

               (b) In the event a refund check is received, it must be forwarded to the servicing
               accounting office for deposit within one business day. The original accounting
               classification code should be provided to credit the funds accurately.

       (2) If the cardholder and vendor cannot reach an agreement on resolution of the
       discrepancy, then the cardholder must formally dispute the purchase on line with the
       bank. The bank will credit the purchase cardholder’s account until the dispute is
       resolved.

w. Lost or Stolen Purchase Cards and Convenience Checks, and/or Compromised Accounts.

       (1) Reporting Lost or Stolen Purchase Cards and convenience checks, and/or
       Compromised Accounts. The cardholder must report immediately the loss or theft of their
       purchase card and/or convenience checks to the APC, the approving official and the card-
       issuing bank in order to avoid liability for unauthorized purchases on the card. The
       cardholder must also report immediately to those indicated above a compromised account
       (i.e. identity theft) or suspicion of a compromised account. The necessary information to
       report to the card-issuing bank includes the cardholder’s complete name, card number,
       check numbers, and purchases made on the date of loss or theft. In the event of theft, the
       cardholder should also provide the bank the date that the theft was reported to the police.

       (2) Card Re-issuance. The card-issuing bank will issue a new card to the cardholder
       within two working days from the time that the loss or theft is reported. A cardholder
       who reports more than one incident of loss or theft within a 12-month period will require
       authorization from the COCO in order to have another card re-issued.

x. Accounting Classification Code Adjustments. Each cardholder has a primary use or "default"
accounting classification code based on the primary use of the card, i.e., whatever the office is
primarily purchasing. For example, Flight Standards offices may have a primary use of the card
for aircraft rental. The card may be used for purchases other than the "primary use" purpose;
however, the action will require a different accounting classification code assignment. The
cardholder is required to assign the correct object class code for each item purchased. The
approving official is required to review the statement for accuracy, for potential for split
purchases, and to approve each individual transaction.

y. Destroying Purchase Cards and Convenience Checks.

       (1) When an account has been closed, all related purchase cards and unused checks
       should be recorded and properly destroyed.

       (2) Once the financial institution has been notified to cancel an account, checks
       attempting to post after the closure date will be declined. The financial institution
       security associates and bank representatives will investigate each check to determine if
       floating checks were written by the account holder and valid for payment. If the check is
       valid, the checks will post to the new account number, if not, the checks will be returned
       for non-payment and further investigated by the financial institution.

z. Non-Compliance. The purchase card is considered Government property. The FAA will
comply with the FAPM Letter 2635 Code of Conduct & Discipline Order, HRPM 4.1 on
Standards of Conduct, and HROI Table of Penalties for any purchase cardholder, approving
official, supervisor, and manager misuse and/or fraud of Government property.

aa. Suspension. The purchase card privileges of any cardholder found to be non-compliant with
purchase card guidance twice in a six-month period will be suspended for six months. The
cardholder’s privileges may be restored upon completion of remedial training or permanently
revoked. Notifications regarding non-compliance will be sent to the manager one level above
the AO.

bb. Organizational Standard Operating Procedures. Organizations may establish internal
standard operating procedures (SOP) for their cardholders addressing the processing of purchase
card transactions (e.g. the ATO Purchasing SOP). However, SOPs must not diminish or change
the intent of AMS Policy or Guidance.


2 Convenience Checks Revised 10/2010

a. As convenience checks are an extension of the applicable purchase card account, all purchase
card policy and guidance applies to check usage.

b. Convenience Check Usage. A convenience check may be issued only when the service or
goods for which payment is being made is operationally critical, cost effective and consistent
with FAA procurement policies. In addition, convenience checks are to be issued only in
"exceptional situations" when the use of payment mechanisms such as an automated
clearinghouse, or a Government purchase card are not accepted.

(1) Convenience checks may only be used:

(a) Where the political, financial, or communications infrastructure does not support payment by
Electronic Funds Transfer (EFT) in a foreign country;

(b) Where the payment is to a recipient within an area designated by the President or an
authorized agency administrator as a disaster area;

(c) Where paying by EFT would jeopardize military or law enforcement operations or national
security interests;

(d) Where a cost-benefit analysis shows that making non-recurring payments by EFT are not
justified;
(e) Where an agency’s need for goods and services is of such unusual and compelling urgency
that the Government would be seriously injured unless payment is made by a method other than
EFT; or

(f) When there is only one source for goods or services and the Government would be seriously
injured unless payment is made by a method other than EFT.

(2) Convenience checks may not be used for:

(a) The issuance of travel advances when the Government-issued travel charge card is revoked or
cancelled due to delinquent payment or for personal reasons;

(b) Cash; or

(c) Travel or travel-related expenses.

c. Authorization Level.

(1) Purchases using convenience checks must be approved in advance by the second-level
manager. The convenience check-approving official must initial the check register to verify that
the payee does not accept the purchase card.

(2) If the approving official is not located at the same site as the person authorized to issue the
check (check writer), verbal approval, followed by written documentation, is satisfactory. A
copy of the written documentation authorizing the purchase must be provided to the check
writer. If the second-level manager is not readily available, another individual at that level or
higher may approve the use of the check, provided that he/she can attest that the need clearly
follows the guidelines stated above.

(3) If the check writer is providing the check to another employee who will actually be
submitting the check to the vendor/merchant/individual for payment, and the latter employee is
in a different line of business than the check writer, then the approving official will be the
second-level supervisor of the employee paying the vendor/merchant/individual rather than the
second level supervisor of the check writer.

d. Issuing a Convenience Check.

(1) Convenience checks are carbon checks. The following information must be entered in the
appropriate space on the check and must be written, printed in ink or typed:

(a) Date: Enter the date on which the convenience check was issued to vendor for purchase. The
date can be spelled out (e.g., August 27, 2008) or written (8/27/08). Do not predate or postdate a
convenience check.

(b) Pay to the Order of: Enter the name of the payee. (Individuals may not issue convenience
checks payable to themselves.)
(c) Amount. The dollar amount of the convenience check must be written and spelled out in the
space provided, (e.g., "$126.39" and spelled out as "one hundred and twenty-six and 39/100,"
followed by a horizontal line out to the end of the space provided).

(d) Memo. (Additional Information). Enter information pertinent to the purchase, e.g., radar
parts, pavement repair, emergency plumbing.

(e) Authorized Signature. Sign in the space provided. Your signature should be in the same
format as the name printed on the convenience check, (e.g., if first, middle, and last names are
spelled out in full rather than initials being used, your signed name must also be spelled out in
full).

(2) Except as otherwise authorized, checks shall only be used for officially approved purchases
and issued only by the individual whose name appears on the check. Documentation of the
“exceptional situation” required to issue a check shall be maintained with the purchase card
check file.

e. Spending Limitation.

(1) Convenience checks access the same single purchase and monthly purchase limits established
for the purchase card account. The established monthly limit will cover purchases made by both
the purchase card and the convenience checks. Approving officials will determine the
appropriate dollar amount of single purchases limits to be established for each cardholder;
however, each convenience check issued cannot exceed $2,500.

(2) A pre-established dollar "not to exceed" limit of $2,500 will be printed on the checks. Under
no circumstances shall a check be written over $2,500.

f. Knowing Your Balance. Cleared convenience checks are deducted from the monthly purchase
limit when they actually clear the bank, not when they are written. Monthly purchase limits are
renewed on the 20th of each month. You are responsible for tracking your individual available
balance and reconciling cleared convenience checks. Remember any transactions made with your
purchase card will also be counted toward your monthly balance. The following is important.

(1) Allow time for each convenience check to clear, which may overlap billing cycles;

(2) Ensure the monthly purchase limit is sufficient to cover written checks; and

(3) At the beginning of each billing cycle, convenience checks that appear on the statement as
cleared should be deducted from your balance.

IMPORTANT NOTE: This account is different from your personal checking account because
unused balances do not accumulate. Exceeding your purchase limit will result in convenience
checks being returned for insufficient funds.

g. Safeguarding and Accountability of Blank Convenience Checks.
(1) For security purposes, the following items are preprinted on the face of all convenience
checks:

(a) Name and work address of the authorized convenience check holder;

(b) Legend: NOT VALID FOR MORE THAN $2,500;

(2) Convenience checks shall be safeguarded in accordance with FAA Order 1600.6, FAA
Security Risk Management Program. When not in use, checks are to be kept in a secured area,
i.e., locked safe or cabinet or another secured environment approved by the servicing security
element to protect them from being stolen or misused.

h. Insufficient Check Fees. The financial institution does not charge a fee for insufficient checks;
however, the vendor may charge a fee. This fee may vary depending upon the vendor and/or
amount of the check.

i. Maintaining Your Convenience Check Register. A convenience check register should be
maintained to record each convenience check transaction. The convenience check number, date
issued, the payee, a description of the purchase, the emergency convenience check amount, and
the account fee can be entered.

j. Maintaining Receipts and Record Retention. The carbon copy of the check, the merchandise
receipt and invoice must be maintained for each purchase and matched against the convenience
check register. Records should be retained in the office and then archived according to the
agency’s Vital Record and Retention Manual. Records include the monthly statement of
account, convenience check register, receipts, and all other supporting documentation.

k. Account Fees. The fees associated with writing a convenience check will be charged back to
the individual check writer’s LOB and will appear on the monthly statement.

l. Billing Statement. The monthly purchase card and convenience check statement will show the
merchant/vendor name, the amount of the check, and the check number of all cleared checks.

m. Reconciling Your Account. The monthly statement must be cross-checked with the
convenience check register, carbon copy of the check, receipt, invoice, and internal log to ensure
that the register and statement amounts are the same. Any discrepancies must be resolved
immediately with the financial institution. Keep in mind that cleared checks that may appear on
the statement may be checks written the prior month.


B Clauses Added 1/2009

view contract clauses


C Forms Added 1/2009
view procurement forms
T3.3.1 - Contract Funding, Financing & Payment Revised 8/2009


A Contract Funding, Financing & Payment

1 Contract Funding Revised 10/2007

a. Anti-Deficiency Act. The FAA must comply with the Anti-Deficiency Act (31 U.S.C. 1341)
and all other fiscal laws. The Anti-Deficiency Act prohibits FAA from creating or authorizing
an obligation in excess of the funds available, or in advance of appropriations, unless otherwise
authorized by law. The Act applies to all forms of procurement, including contracts and
purchase card transactions.

b. Funds Availability. Before executing a contractual instrument that obligates funds, the
Contracting Officer (CO) must ensure sufficient funds are available. The CO must obtain
written assurance from the program/requisitioning office that funds are available.

c. Awards Subject to Availability of Funds. There may be times when a contract will be awarded
before funds become available, such as an award for services to begin at the beginning of the
next fiscal year. When this occurs, the contractor must be put on notice that the award is subject
to the availability of funds; the CO must incorporate AMS Clause 3.3.1-10, Availability of
Funds, or AMS Clause 3.3.1-11, Availability of Funds for the Next Fiscal Year, into the SIR or
contract.

d. Services Crossing Fiscal Years. FAA may enter into contracts for severable services for a
period that begins in one fiscal year and ends in the next fiscal year if (without regard to any
option to extend the period of the contract) the contract period does not exceed one year.

e. Distribution to Accounting Office. The CO should provide copies of all contract awards and
modifications to the accounting office to ensure that it can properly document and
track payments and available funding.


2 Continuing Resolution Revised 10/2007

a. Description. A continuing resolution (CR) is a type of appropriations legislation to
temporarily fund Government operations and programs when a formal appropriation bill(s) has
not been signed into law before the start of a new fiscal year. A CR funds existing operations
and programs at current or reduced levels for a stated period of time. The stated period time
could range from several weeks to many months. Generally, a CR funds only on-going
operations, and does not fund new initiatives or expanded scope for existing programs.

b. Subject to the Availability of Funds and CR. To allow for the solicitation of requirements
before funds becoming available, the CO may issue a SIR with clauses that expressly condition
FAA’s obligation under the contract upon the availability of funds. (See Contract Funding above
for more information).

c. Coordination. To ensure available funding is not exceeded and to comply with conditions
under a CR, the CO should consult with:

        (1) Legal Counsel. Legal counsel’s review a proposed procurement action will ensure
        that award complies with CR conditions;

        (2) Budget and Finance. To ensure that procurement activity complies with FAA’s
        overall budget allowance during a CR, the CO should consult with the budget or finance
        office or review any fiscal or CR guidance before award; and

        (3) Program Office. Because a CR affects the overall operations and planning of FAA
        programs, the CO should coordinate with the program office to ensure that an award is
        within their available budget.


3 Electronic Fund Transfer Revised 10/2007

a. Electronic Fund Transfer (EFT) applies to all new contract awards and contract modifications
executed, unless extenuating circumstances exist as described below. Additional EFT guidance
and clauses pertaining to real property and utilities are in AMS Real Estate Guidance 3.1.4.

b. The FAA will protect against improper disclosure of a contractor's EFT information.

c. 31 U.S.C. 3332 requires that all payments be made through EFT. The Accounting Operations
Division Manager, AMZ-100, may determine that the submission of EFT information is not
required and grant an EFT waiver if a vendor meets one of the exceptions listed below:

        (1) Contracts awarded by COs outside the United States and Puerto Rico may provide for
        payment by other than EFT when EFT payments are not supported by the foreign
        country. EFT payment may still be used, if the political, financial and communications
        infrastructure in the foreign country supports payment by EFT or payments in other than
        U.S. currency may be made safely;

        (2) Contracts paid in other than U.S. currency may provide for payment by other than
        EFT. EFT payment may still be used, if the political, financial and communications
        infrastructure in the foreign country supports payment by EFT or payments in other than
        U.S. currency may be made safely;

        (3) Classified contracts when EFT payments could compromise the safeguarding of
        classified information or national security, or where arrangements for appropriate EFT
        payments would be impractical due to security considerations;
       (4) Contracts executed by deployed COs in the course of military operations, including
       but not limited to, contingency operations as defined in 10 U.S.C. 101(a)(13) where:

               (a) EFT payment is not known to be possible; or

               (b) EFT payment would not support the objectives of the operation.

       (5) Contracts executed by any CO in the conduct of emergency operations, such as
       responses to natural disasters or national or civil emergencies may provide for payments
       by other than EFT where:

               (a) EFT payment is not known to be possible; or

               (b) EFT payment would not support the objectives of the operation.

       (6) When FAA does not expect to make more than one payment to the same recipient
       within a one-year period and the payment is non-recurring;

       (7) Where the FAA's need for goods or services is of such unusual and compelling
       urgency that FAA would be seriously injured unless payment is made by a method other
       than EFT;

       (8) Contracts where the contractor claims that payment by EFT would impose a hardship
       due to a physical or mental disability or a geographic, language, or literacy barrier; or

       (9) Contracts where the contractor claims that payment by EFT would impose a financial
       hardship.

d. Waiver requests. The Accounting Operations Office will review and approve/disapprove all
vendor requests for exceptions to the EFT payment requirement. The waiver process for EFT
payments is:

(1) CO provides the applicable EFT clauses as part of the solicitation package.

(2) If the otherwise successful offeror claims an inability to comply with the EFT requirement,
the CO requests the vendor to complete an Electronic Funds Transfer (EFT) Waiver Request
Form (see AMS Procurement Form Templates). The waiver request includes the contractor's
justification for not receiving payment by EFT. The CO forwards the waiver request, together
with a recommendation and the completed DELPHI Vendor Entry Worksheet (see the National
Prism Website, https://employees.faa.gov/org/staffoffices/aba/prism/) (FAA only), to the
Accounting Operations Division, AMZ-100.

(3) The Accounting Operations Division approves or disapproves the waiver in writing and
returns the signed determination to the CO. The waiver determination includes
recommendations to assist the vendor to become capable of receiving EFT payments. The CO
retains a copy of the waiver request disposition in the contract file.
(4) If the waiver is disapproved, the CO may consult with the Accounts Payable manager for
further guidance.


4 Central Contractor Registration (CCR) Revised 10/2007

a. Central Contractor Registration (CCR) applies to all new contract awards, contract
modifications, agreements, orders, or leases executed. Applicable CCR clauses for real property
or utility contracts or agreements are specified in Real Estate Guidance. CCR is the primary
Government repository for contractor information required for doing business with the
Government. CCR requires a Data Universal Numbering System (DUNS) number for
registration. The DUNS is the 9-digit number assigned by Dun and Bradstreet, Inc. (D&B) to
identify unique business entities. Data Universal Numbering System +4 (DUNS +4) number
means the DUNS number assigned by D&B plus a 4-character suffix that may be assigned by a
business concern. This 4-character suffix may be assigned at the discretion of the business
concern to establish additional CCR records for identifying alternative Electronic Funds Transfer
(EFT) accounts for the same parent concern. Registered in the CCR database means that the
contractor has entered all mandatory information, including the DUNS number or the DUNS +4
number, into the CCR database.

b. Prospective contractors must be registered in the CCR database before award of a contract or
agreement, except for:

       (1) Purchases made by using a Government purchase card;

       (2) Classified contracts when registration in the CCR database, or use of CCR data, could
       compromise the safeguarding of classified information or national security;

       (3) Contracts awarded by:

               (a) Deployed COs in the course of military operations, including, but not limited
               to, contingency operations as defined in 10 U.S.C. 101(a)(13) or humanitarian or
               peacekeeping operations as defined in 10 U.S.C. 2302(7); or

               (b) COs conducting emergency operations, such as responses to natural or
               environmental disasters or national or civil emergencies, e.g., Robert T. Stafford
               Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121);

       (4) Contracts to support unusual or compelling needs. A compelling need is where FAA
       would be seriously injured if the contract is not awarded;

       (5) Awards made to foreign vendors for work performed outside the United States, if it is
       impractical to obtain CCR registration;

       (6) One time/single payment contracts or agreements, such as Real Property purchase and
       sales agreements, where the seller of the property is not in the practice of offering real
       property to FAA as a commercial practice and does not anticipate acting as a vendor to
       FAA in the foreseeable future; or

       (7) Long term leases and utility contracts where a CCR clause is not currently in effect
       and it is determined by the CO that forcing compliance is impractical.

c. In contracts or agreements awarded under paragraph (b) (3) or (4) of this section, the CO
should modify the contract or agreement to require CCR registration as soon as practical after
award is made.

d. Change of Name in CCR.

       (1) The contractor must provide the responsible CO a minimum of one business day's
       written notification of its intention to change its business name in the CCR database,
       comply with the requirements of a novation or change of name agreement in AMS
       Procurement Guidance T3.10.1, and agree in writing to the timeline and procedures
       specified by the responsible CO for the change. The contractor must provide the CO
       documentation to support the legally changed name. This notification is required when
       the contractor has:

               (a) Legally changed its business name;

               (b) Changed its "doing business as" name;

               (c) Changed its division name; or

               (d) Transferred the assets used in performing the contract, but has not completed
               the necessary requirements regarding novation and change-of-name agreements in
               AMS Procurement Guidance T3.10.1.

       (2) If the contractor fails to comply with the requirements AMS Clause 3.3.1-33, Central
       Contractor Registration, and has not provided a properly executed novation or change-of-
       name agreement, the CCR information that shows the contractor to be other than the
       contractor indicated in the contract will be considered to be incorrect information within
       the meaning of the "Suspension of Payment" paragraph of AMS Clause 3.3.1-34,
       Payment by Electronic Funds Transfer/Central Contractor Registration. If the
       contractor's EFT information in CCR is considered to be incorrect:

               (a) FAA need not make payment to the contractor until correct EFT information is
               entered into the CCR database; and

               (b) Any invoice or contract financing request must be deemed not to be a proper
               invoice for the purpose of prompt payment under the contract.

       (3) The contractor may not change the name or address for electronic funds transfer
       payments (EFT) or manual payments, as appropriate, in the CCR record unless an
       assignment of claims has been properly executed. (See AMS Procurement Guidance
       T3.3.1, Assignment of Claims)

       (4) Assignees must be separately registered in the CCR database. Information provided
       to the contractor's CCR record that indicates payments, including those made by EFT, to
       an ultimate recipient other than that contractor will be considered to be incorrect
       information within the meaning of the "Suspension of payment" paragraph of AMS
       Clause 3.3.1-34, Payment by Electronic Funds Transfer/Central Contractor Registration.

e. Unless the acquisition is exempt, the CO:

       (1) Must verify that the prospective contractor is registered in the CCR database before
       awarding a contract or agreement;

       (2) Should use the DUNS number or, if applicable, the DUNS+4 number, to verify
       registration:

               (a) Via the Internet at https://www.bpn.gov/ccr; or

               (b) By calling toll-free: 1-888-227-2423, commercial: (269) 961-5757.

       (3) When a CO modifies an existing contract or agreement that does not already include
       the requirement to be registered in CCR, the CO must then incorporate, as appropriate,
       AMS Clause 3.3.1-33, Central Contractor Registration.

       (4) Need not verify registration before placing an order or call if the contract or
       agreement includes the clause at AMS Clause 3.3.1-33.

f. If the CO, when awarding a contract or agreement, determines that a prospective contractor is
not registered in CCR and an exception to the registration requirements for the award does not
apply, the CO:

       (1) Determines if the needs of the requiring activity allow for a delay. If a delay is
       allowable, the CO advises the apparently successful offeror of the required date to
       become registered. If the offeror does not become registered by the required date, the
       CO, after consultation with the program office, proceeds to award to the next otherwise
       successful registered offeror following the same procedures (i.e., if the next apparently
       successful offeror is not registered, the CO must advise the offeror of the required date to
       become registered, etc.); or

       (2) Determines if the needs of the requiring activity do not allow for a delay. If the needs
       do not reasonably allow for a delay, the CO will proceed to award to the next otherwise
       successful registered offeror. Written approval is required at one level above the CO.

g. The FAA must protect against improper disclosure of contractor CCR information.
h. In accordance with FAA procedures, the CO provides the DUNS number or, if applicable, the
DUNS +4 on contractual documents transmitted to the payment office.


5 Types of Payment Revised 10/2007

a. Payment provisions should balance protection of FAA’s interests against adequately
compensating the contractor for products delivered or services performed, including
construction.

b. COs should maintain a payment log for each contact detailing funding and payment
information, i.e., a log showing available funding, date and amount of invoices, balance of
funding after payments, etc). This log should be filed in the official contract file.

c. COs should consider the following alternatives when establishing a basis for payment in award
documents:

Type of Payment                      Description
Single Payment (Lump Sum)            Where one payment is made to a contractor after completion and
                                     acceptance of all work. (Preferred method)
Partial Payment                      Payments authorized to be made upon acceptance of one or more
                                     complete units (or one or more distinct items of service) called for
                                     under a contract.
Progress Payment                     Multiple payments made prior to delivery during performance based
                                     on a percentage or stage of completion.
Recurring Payment                    Payments made on a fixed, periodic basis for the delivery or
                                     performance of recurring firm fixed-price products or services.
Provisional Payment                  Payments made for the delivery or performance of products or
                                     services recurring under a contract.
Advance Payment                      Payment made before any performance of work under the contract.
                                     Payment should be secured by bond or collateral with expenditures
                                     made from a joint account requiring FAA approval. Considered to be
                                     contract financing, advance payments are the least preferred and must
                                     be authorized sparingly.
Performance-Based Payment            Contract financing payments that are not payments for accepted items.

6 Single and Partial Payments Revised 10/2007

a. Single Payments (Lump Sum).

        (1) Where one payment is made to a contractor after completion and acceptance of all
        work.

        (2) The preferred method as FAA only makes payment after acceptance of all contract
        work (minimal risk).

b. Partial Payments.
        (1) Payments authorized to be made upon acceptance of one or more complete units (or
        one or more distinct items of service) called for under a contract.

        (2) Despite partial payments being generally treated as a method of payment rather than a
        method of contract financing, the use of partial payments can provide the assistance
        necessary for some contractors to participate in FAA contracts.

        (3) Circumstances where partial payments should be prohibited include:

                (a) When the additional administrative time required to issue 2 or more payments
                may not be cost effective.

                (b) When partial delivery of individual components does not constitute a usable
                item on its own.


7 Progress Payments Revised 10/2007

a. Definition. Progress payments consist of multiple payments made during performance and
prior to delivery based on a percentage or stage of completion. Payments must be secured
against materials/equipment purchased until liquidated by deliveries under the contract.

b. Basis. FAA will make progress payments on the basis of percentage or stage of completion.
Typical progress payment provisions call for payment of part of the contract price only when a
completed stage of work (milestone) or a completed component can be said to be of value to
FAA in the event the contract were to be terminated at that point; however, progress payment
schedules can be established that will allow payment based on an estimated percentage of
completion. Generally, the progress payment rate to the prime contractor is 80% of the total
costs of performing the contract and 85% for small businesses. The CO should provide for
progress payments if the contractor:

        (1) Will not be able to bill for the first delivery of products, or other performance
        milestones, for a substantial time after work is scheduled to begin; and

        (2) Will make expenditures for contract performance during the pre-delivery period that
        have a significant impact on the contractor's working capital.

c. Withholding payment. When there is reason to doubt the amount of a progress payment
request, only the doubtful amount should be withheld, subject to later adjustment after review or
audit. Any clearly proper and due amounts should be paid without awaiting resolution of the
differences. Post payment reviews may be made when considered desirable by the CO to
determine the validity of progress payments already made and those expected to be made in the
future. The post payment review should include a review of whether or not the unpaid balance
of the contract price will be adequate to cover the anticipated cost of completion.
d. Subcontracts. The CO should encourage contractors to provide progress payments to
subcontractors subject to the bases described in subparagraph (b), "Basis." The CO should
consider the following when contractors submit payment requests that include progress payments
for subcontractors:

       (1) The contractor's request for payment may include the full amount paid to
       subcontractors as progress payments;

       (2) The contractor's inclusion of the substance of clause "Progress Payments" in the
       prime contract, modified to indicate that:

              (a) The contractor, not FAA, awards the subcontract and administers the progress
              payments;

              (b) Title will vest in FAA, not the contractor;

              (c) The subcontractor will install the necessary management control systems,
              including internal audit procedures; and

              (d) The subcontractor will allow the CO/FAA access to reports and records.

       The CO should, to the extent appropriate, review the subcontract as part of the overall
       administration of progress payments in the prime contract.

       (3) If the contractor makes progress payments to a subcontractor under a cost-
       reimbursement prime contract, the CO may accept the progress payments as reimbursable
       costs of the prime contract only under the following conditions:

              (a) The payments are made in accordance with this subparagraph (d),
              "Subcontracts;"

              (b) The subcontractor complies with relevant liquidation principles;

              (c) The subcontract contains progress payments terms as defined in this section;
              and

              (d) The subcontractor has established a FAA-approved job cost accounting system
              that is satisfactory for cost reimbursement contracts.

       (4) If there is adequate protection to FAA through inclusion of appropriate clauses in
       subcontracts involving foreign subcontractor.


8 Recurring, Provisional, and Advance Payments Revised 10/2007
a. Recurring Payments (Automatic Payments). Payments made on a fixed, periodic basis for the
delivery or performance of recurring firm fixed-price products or services.

       (1) COs must annotate on the award that payments are to be setup on the Recurring
       Invoice Template (auto pay).

       (2) The CO must request an annual invoice from the contractor detailing the recurring
       fixed amount and the total amount. This annual invoice must be certified by the CO and
       submitted to accounting.

       (3) If deductions are required, the CO must notify the accounting office in writing of the
       deduction to be made the following month, and the contract will be modified to reflect
       the change in value.

b. Provisional Payments. Payments made for the delivery or performance of products or services
recurring under a contract. Invoices are necessary, receiving reports are not.

c. Advance Payments. Payment made before any performance of work under the contract.
Payments should be secured by bond or collateral with expenditures made from a joint account
requiring FAA approval. (See Finance under this section for more information)


9 Performance-based Payments Added 10/2007

a. General.

       (1) Performance-based payments (PBP) are contract financing payments that are not
       payments for accepted items. The CO may use PBP in contracts, subject to the
       guidelines below, when the CO finds them practical and the contractor agrees to their use.

       (2) PBP do not apply to the following:

              (a) Payments under cost-reimbursement contracts;

              (b) Contracts for architect-engineer services or construction, when the contracts
              provide for progress payments based upon a percentage or stage of completion;

              (c) Contracts for research or development; or

              (d) Contracts awarded through sealed bid or competitive negotiation procedures.

       (3) PBP are fully recoverable, in the same manner as progress payments, in the event of
       default. PBP should not be used when other forms of contract financing are provided.

       (4) For accounting purposes, PBP should be treated like progress payments based on
       costs.
        (5) Because PBP are contract financing payments they are not subject to the interest-
        penalty provisions of prompt payment clauses; however, PBP should be made in
        accordance with FAA's policy for prompt payment of contract financing payments.

b. Criteria for use.

        (1) PBP should be used only if the following conditions are met:

                (a) The CO and offeror are able to agree on the performance-based payment
                terms;

                (b) The contract is a definitized fixed-price type contract; and

                (c) The contract does not provide for other methods of contract financing.

c. Application. The CO should determine if PBP will be made either on a whole contract or
deliverable item basis. Financing payments to be made on a whole contract basis are applicable
to the entire contract, and not to specific deliverable items. Financing payments to be made on a
deliverable item basis are applicable to a specific individual deliverable item.

A deliverable item for these purposes is a separate item with a distinct unit price. Thus, a
contract line item for 10 airplanes, with a unit price of $1,000,000 each, has ten deliverable items
(the separate planes). A contract line item for 1 lot of 10 airplanes, with a lot price of
$10,000,000, has only one deliverable item (the lot).

d. Establishing Performance Bases. PBP may be made on any of the following bases:

        (1) Specifically described events (e.g., milestones) or some measurable criterion of
        performance. Each event or performance criterion that will trigger a finance payment
        will be an integral and necessary part of contract performance and will be identified in
        the contract, along with a description of what constitutes successful performance of the
        event or attainment of the performance criterion. The signing of contracts or
        modifications, the exercise of options, or other such actions will not be events or criteria
        for performance-based payments. An event need not be a critical event in order to trigger
        a payment, but successful performance of each such event or performance criterion will
        be readily verifiable.

        (2) Events or criteria may be either severable or cumulative. The successful completion
        of a severable event or criterion is independent of the accomplishment of any other event
        or criterion. In contrast, the successful accomplishment of a cumulative event or criterion
        is dependent upon the previous accomplishment of another event or criterion. A contract
        may provide for more than one series of severable and/or cumulative performance events
        or criteria performed in parallel. The following will be included in the contract:

                (a) The contract will not permit payment for a cumulative event or criterion until
                the dependent event or criterion has been successfully completed.
               (b) Severable events or criteria will be specifically identified in the contract.

               (c) The contract will identify which events or criteria are preconditions for the
               successful achievement of each cumulative event or criterion.

               (d) If payment of performance-based finance amounts is on a deliverable item
               basis, each event or performance criterion will be part of the performance
               necessary for that deliverable item and will be identified to a specific contract line
               item or subline item.

e. Establishing Performance-based Finance Payment Amounts.

       (1) The CO will establish a complete, fully-defined schedule of events or performance
       criteria and payment amounts when negotiating contract terms. If a contract action
       significantly affects the price, or event or performance criterion, the CO responsible for
       pricing the contract modification will adjust the performance-based payment schedule
       appropriately.

       (2) Total performance-based payments will not exceed 90 percent of the contract price if
       on a whole contract basis, or 90 percent of the delivery item price if on a delivery item
       basis. The amount of each performance-based payment will be specifically stated either
       as a dollar amount or as a percentage of a specifically identified price (e.g., contract
       price, or unit price of the deliverable item). The payment of contract financing has a cost
       to the Government in terms of interest paid by the Treasury to borrow funds to make the
       payment. Because the CO has wide discretion as to the timing and amount of the
       performance-based payments, the CO must ensure that the total contract price is fair and
       reasonable. This fair and reasonable determination must consider all pertinent factors,
       including the financing costs to the Treasury of the performance-based payments.
       Performance-based payment amounts may be established on any rational basis
       determined by the CO or agency procedures, which may include (but are not limited to):

               (a) Engineering estimates of stages of completion;

               (b) Engineering estimates of hours or other measures of effort to be expended in
               performance of an event or achievement of a performance criterion; or

               (c) The estimated projected cost of performance of particular events.

       (3) When subsequent contract modifications are issued, the performance-based payment
       schedule will be adjusted as necessary to reflect the actions required by those contract
       modifications.

f. Instructions for Multiple Appropriations. If there is more than one appropriation account (or
subaccount) funding payments on the contract, the CO will provide instructions to the payment
office for distribution of financing payments to the respective funds accounts. Distribution
instructions must be consistent with the contract's liquidation provisions.
g. Liquidating Performance-based Finance Payments. Performance-based amounts will be
liquidated by deducting a percentage or a designated dollar amount from the delivery payments.
The CO will specify the liquidation rate or designated dollar amount in the contract. The method
of liquidation will ensure complete liquidation no later than final payment.

       (1) If the performance-based payments are established on a delivery item basis, the
       liquidation amount for each line item will be the percent of that delivery item price that
       was previously paid under performance-based finance payments or the designated dollar
       amount.

       (2) If the performance-based finance payments are on a whole contract basis, liquidation
       will be by predesignated liquidation amounts or liquidation percentages.

h. Reviews. The CO is responsible for determining what reviews are required for protection of
FAA interests. The CO should consider the contractor's experience, performance record,
reliability, financial strength, and the adequacy of controls established by the contractor for the
administration of performance-based payments. Based upon the risk to FAA, post-payment
reviews and verifications should normally be arranged as considered appropriate by the CO. If
considered necessary by the CO, pre-payment reviews may be required.

i. Incomplete Performance. The CO will not approve a performance-based payment until the
specified event or performance criterion has been successfully accomplished in accordance with
the contract. If an event is cumulative, the CO will not approve the performance-based payment
unless all identified preceding events or criteria are accomplished.

j. Government-caused Delay. Entitlement to a performance-based payment is solely on the basis
of successful performance of the specified events or performance criteria. However, if there is a
Government-caused delay, the CO may renegotiate the performance-based payment schedule to
facilitate contractor billings for any successfully accomplished portions of the delayed event or
criterion.

k. Suspension or Reduction of Performance-based Payments.

       (1) Enforcing the Clause.

               (a) The Progress Payments clause provides the CO the right to reduce or suspend
               progress payments, or to increase the liquidation rate under certain conditions;
               however, the CO should take these actions only in accordance with the contract
               terms and never precipitately or arbitrarily. These actions should be taken only
               after:

                       (i) Notifying the contractor of the intended action and providing an
                       opportunity for discussion;
               (ii) Evaluating the effect of the action on the contractor's operations,
               based on the contractor's financial condition, projected cash requirements,
               and the existing or available credit arrangements; and

               (iii) Considering the general equities of the particular situation.

       (b) The CO should take immediate unilateral action only if warranted by
       circumstances such as overpayments or unsatisfactory contract performance.

       (c) In all cases, the CO should:

               (i) Act fairly and reasonably;

               (ii) Base decisions on substantial evidence; and

               (iii) Document the contract file. Findings made under the Progress
               Payments clause should be in writing.

(2) Contractor Noncompliance.

       (a) The contractor must comply with all material requirements of the contract.
       This includes the requirement to maintain an efficient and reliable accounting
       system and controls, adequate for the proper administration of progress
       payments. If the system or controls are deemed inadequate, progress payments
       should be suspended (or the portion of progress payments associated with the
       unacceptable portion of the contractor's accounting system should be suspended)
       until the necessary changes have been made.

       (b) If the contractor fails to comply with the contract without fault or negligence,
       the CO will not take action permitted by Progress Payments clause, other than to
       correct overpayments and collect amounts due from the contractor.

(3) Unsatisfactory financial condition.

       (a) If the CO finds that contract performance (including full liquidation of
       progress payments) is endangered by the contractor's financial condition, or by a
       failure to make progress, the CO should require the contractor to make additional
       operating or financial arrangements adequate for completing the contract without
       loss to FAA.

       (b) If the CO concludes that further progress payments would increase the
       probable loss to FAA, the CO should suspend progress payments and all other
       payments until the unliquidated balance of progress payments is eliminated.

(4) Delinquency in payment of costs of performance.
                   (a) If the contractor is delinquent in paying the costs of contract performance in
                   the ordinary course of business, the CO should evaluate whether the delinquency
                   is caused by an unsatisfactory financial condition and, if so, should apply the
                   guidance in paragraph (c) of this section. If the contractor's financial condition is
                   satisfactory, the CO should not deny progress payments if the contractor agrees
                   to:

                           (i) Cure the payment delinquencies;

                           (ii) Avoid further delinquencies; and

                           (iii) Make additional arrangements adequate for completing the contract
                           without loss to FAA.

                   (b) If the contractor has, in good faith, disputed amounts claimed by
                   subcontractors, suppliers, or others, the CO should not consider the payments
                   delinquent until the amounts due are established by the parties through litigation
                   or arbitration; however, the amounts should be excluded from costs eligible for
                   progress payments so long as they are disputed.

                   (c) Determinations of delinquency in making contributions under employee
                   pension, profit sharing, or stock ownership plans, and exclusion of costs for such
                   contributions from progress payment requests should be in accordance with the
                   procedures for progress payments.

l. Title.

            (1) The CO must ensure that FAA title under the provisions of the Performance-Based
            Payments clause is not compromised by other encumbrances. Ordinarily, the CO, in the
            absence of reason to believe otherwise, may rely upon the contractor's certification
            contained in the payment request.

            (2) If the CO becomes aware of any arrangement or condition that would impair FAA's
            title to the property affected by the Performance-Based Payments clause, the CO should
            require additional protective provisions.

            (3) The existence of any such encumbrance is a violation of the contractor's obligations
            under the contract, and the CO may, if necessary, suspend or reduce payments under the